3 Handy Concepts to Help You Think Clearly
Bayesian thinking, first principles thinking, and Occam’s razor.
1. Bayesian Thinking
“Violent Crime Doubles”
If you read that headline in your local newspaper, you might assume you need to start watching your back.
But is that true?
Let’s say the risk of getting assaulted in your town last year was 1 in 10,000.
Since violent crime has doubled, the risk of assault is now 2 in 10,000.
In other words, the likelihood of getting assaulted is no longer 0.01% but 0.02%.
So, while the risk has doubled, it shouldn’t make you too concerned.
This example illustrates the big idea behind what statisticians call Bayes’ theorem(1); that we need to view new data in the light of previous events.
That’s not something that comes naturally to us.
We all tend to blow new information out of proportion.
So, whenever you learn something that seems extraordinary, try to put it in its proper historical context.
That way, your understanding of it will become more nuanced, accurate, and useful.
