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What are the Chances: Of a Swine Infestation? Part 1

The time has come,” The Walrus said,

“To speak of many things…”

In particular, to talk about the probability that you or I may keel over tomorrow because of ‘the dreaded swine flu’.

miss-piggy-jason-wu

We, as a species, are absolutely appalling at estimating the probability of highly unlikely events (called ‘long-tailed events – because they occur at the extreme end of a probability distribution). A little time ago, as geologists measure time, humanity went through a choke point where only a few thousand of us were alive in the whole wide world (real estate would have been pretty cheap!). This is why humanity has so much in common, at a genetic level we have almost everything in common! It also explains why we can mate with any human on the planet and produce viable offspring.

Our brains have been programmed to survive by the mere fact that those that didn’t encourage survival didn’t survive. The philosophers probably tended to meet an untimely end. The ancient humans that sat and pontificated as to whether those plumes were an approaching fire or simply a mirage caused by the heat were not amongst our ancestors. Our forbearers, on seeing the hint of a fire off on the horizon, are the ones that immediately high‑tailed it out of there.

Consider this in light of the recent panic about swine flu. While governments and their citizenry across the world have panicked (my favourite reaction was Afghanistan quarantining its one pig), less than 200 people have died from it. In an average year, over 36,000 Americans alone lose their life to the everyday, ordinary type of flu.

There are two behavioural economic reasons for this disproportionate reaction.

The first is our biased estimation of the probability of extreme events. The more dramatic or unique the event, the easier it is to imagine, then the higher the probability we assign it. While these factors contribute to excellent survival strategies when the world was younger and there was lot more leg room, these days it is what we economists call ‘sub‑optimal’. A better word is ‘stupid’!

The other reason has to do with framing.

Reference:

When Humans Faced Extinction
Dr David Whitehouse 
http://www.freerepublic.com/focus/f-news/926315/posts

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