The average life expectancy in Europe is, roughly, around 80 years, as opposed to close to 40 in many least developing countries. Does this mean that people in Europe live to 80 and those in the poorest countries to 40? If there is a 70% chance of rain tomorrow does it mean that it will not be sunny? If there is a next-to-nothing chance of winning the lottery, does it imply nobody will play the numbers?
It’s interesting how we are somehow making up our own minds about probability, likelihood and possibility when we are faced with a set of odds. Of course in countries with low life expectancies there are plenty of people who live to 80. It’s just that there are a large share of children who die very young, but once older, the chance of making it to old age are actually pretty great.
Think about this: you live in a country where car insurance is not mandatory. Prior to taking out such insurance you think about your chances of actually getting into an accident: if you’re a cautious driver you are less likely to crash. So, you think, you’ll be extra careful and not take out insurance against a very, very, unlikely event. Farmers think this way too: it’s possible to insure against rare atmospheric events, but that insurance may be so expensive that the savings of not paying may equal or exceed an insurance payout should such a rare event occur.
Of course, people do pay the lottery numbers even though their chances of winning are minuscule. So why do we behave so differently in the face of different odds, chances, data and impressions? We seem to be preferring, in some cases the notion of “possibility” – the chance that a marginal event unfolds – over probability – the possibility that an event of large proportions takes hold. Conversely, we often prefer to pay heed to the possibility of a major probability (i.e. there’s a 70% chance of rain), discounting the less likely alternatives.
Even with the probability of, say, a train arriving on time 95% of journeys, there is a 5% chance of it running late or not arriving at all. So how do you manage this difference? In small or marginal matters this is of small or no consequence. However, if we try to develop scenarios and think about the future, that marginal 5% may materialise, amplify and make a huge difference. Of course our minds turn to Tunisia here. For years the country has progressed without major incidents, so it was safe to say that its chances of stability were perhaps 99.5%. Eventually that 0.5% became 100% and set the country on a totally new path. Following Tunisia there was talk of other north African countries following a similar fate. The media and leaders quickly reassured us that there was no such chance. Of course in our minds that 0.5% in, say, Egypt skyrocketed to 10%. And the rest is history.
This illustrates that just because the likelihood of an event is tiny it cannot be ignored. If it is believed that a small likelihood is still plausible it ought to be treated with the same seriousness as if it had a 50% chance – because it can quickly go that way. And when it does, it would be really good to have thought of this beforehand.
Filed under: Future, National outlooks, Scenarios, Tipping point
