Survivorship Bias: Dropping Out of School Won't Make You a Billionaire. I Don't Care Who Did It.

We love stories of people who bucked conventional wisdom to achieve incredible success. But not accounting for the failures in these stories is an error that distorts our view of reality.

So and so dropped out of high school and started a business while working a paper route. Everyone told our intrepid maverick that X business is dead, and he's wasting his time. But he didn't listen. And today, he's a billionaire.

Stories of the maverick overcoming all odds to achieve massive success inspire us. They’re evidence that we overcome any disadvantage.

The stories of these mavericks are a great message. But, they distort our view of reality.

For every wild success, there are thousands of failures we don't hear about.

Because we don't hear about the failures, we tend to mistake the exception for the rule. But when we look at the underlying statistics, we see how much of an anomaly these success stories are.

For example, a higher percentage of high-school graduates achieve financial success than drop-outs.

But, the coverage that successful high-school drop-outs receive is higher. This leads us to believe that successful high-school drop-outs are more common than they really are.

We call this error survivorship bias.

Survivorship bias is an error in which we only consider success and ignore failures. This bias can lead us to overestimate our chance of success in certain circumstances.

You may expect to become a successful lawyer despite dropping out of law school. A story of a successful lawyer who did the same may bolster your belief. But the success rate for law-school drop-outs who try to practice law shows us how rare this is. Survivorship bias skewed your view of reality.

So, the next time you hear a story of success, ask yourself how many people tried to do the same thing and failed. That will give you a better view of the world.