Tonight is EuroMillions and although it’s not the £93m jackpot of last week, I’ll still be buying a ticket. I know statistically I am more likely to die watching the draw than actually winning the jackpot but come 20:00 I’ll be hopeful of becoming rich, rather than fearful of being dead!
This sort of bias has been studied and the results show that for various reasons, most people have a poor intuitive grasp of probability and risk. We fear flying when car travel is more dangerous. We won’t live next door to nuclear power stations but think nothing of x-rays and we think that if a roulette wheel comes up red 5 times in a row, it’s time to put all your chips on black!
There are other areas where intuition excels. To score a free kick in football or a 3 pointer in basketball theoretically, I need to calculate the optimal angle, the exact force to apply and the effects of spin and gravity on the ball. Most top players have no idea how the physics work yet are able to instinctively derive the correct combination.
It’s the same in Change. There are situations where the right answer is counter-intuitive and going on gut feel will get you into trouble,. You need to collect the data and let the analysis speak for itself. There are also situations where it will only slow you down – Luis Suarez has already picked the ball out of the back of the net and is chowing down on his next defender while you’re still looking for your calculator.
As always, the difficulty is knowing which is which.