Tag: Cicero

Survivorship Bias: The Tale of Forgotten Failures

Survivorship bias is a common logical error that distorts our understanding of the world. It happens when we assume that success tells the whole story and when we don’t adequately consider past failures.

There are thousands, even tens of thousands of failures for every big success in the world. But stories of failure are not as sexy as stories of triumph, so they rarely get covered and shared. As we consume one story of success after another, we forget the base rates and overestimate the odds of real success.

“See,” says he, “you who deny a providence, how many have been saved by their prayers to the Gods.”

“Ay,” says Diagoras, “I see those who were saved, but where are those painted who were shipwrecked?”

— Cicero

The Basics

A college dropout becomes a billionaire. Batuli Lamichhane, a chain-smoker, lives to the age of 118. Four young men are rejected by record labels and told “guitar groups are on the way out,” then go on to become the most successful band in history.

Bill Gates, Batuli Lamichhane, and the Beatles are oft-cited examples of people who broke the rules without the expected consequences. We like to focus on people like them—the result of a cognitive shortcut known as survivorship bias.

When we only pay attention to those who survive, we fail to account for base rates and end up misunderstanding how selection processes actually work. The base rate is the probability of a given result we can expect from a sample, expressed as a percentage. If you play roulette, for example, you can be expected to win one out of 38 games, or 2.63%, which is the base rate. The problem arises when we mistake the winners for the rule and not the exception. People like Gates, Lamichhane, and the Beatles are anomalies at one end of a distribution curve. While there is much to learn from them, it would be a mistake to expect the same results from doing the same things.

A stupid decision that works out well becomes a brilliant decision in hindsight.

— Daniel Kahneman

Cause and Effect

Can we achieve anything if we try hard enough? Not necessarily. Survivorship bias leads to an erroneous understanding of cause and effect. People see correlation in mere coincidence. We all love to hear stories of those who beat the odds and became successful, holding them up as proof that the impossible is possible. We ignore failures in pursuit of a coherent narrative about success.

Few would think to write the biography of a business person who goes bankrupt and spends their entire life in debt. Or a musician who tried again and again to get signed and was ignored by record labels. Or of someone who dreams of becoming an actor, moves to LA, and ends up returning a year later, defeated and broke. After all, who wants to hear that? We want the encouragement survivorship bias provides, and the subsequent belief in our own capabilities. The result is an inflated idea of how many people become successful.

The discouraging fact is that success is never guaranteed. Most businesses fail. Most people do not become rich or famous. Most leaps of faith go wrong. It does not mean we should not try, just that we should be realistic with our understanding of reality.

Beware of advice from the successful.

— Barnaby James

Survivorship Bias in Business

Survivorship bias is particularly common in the world of business. Companies which fail early on are ignored, while the rare successes are lauded for decades. Studies of market performance often exclude companies which collapse. This can distort statistics and make success seem more probable than it truly is. Just as history is written by the winners, so is much of our knowledge about business. Those who end up broke and chastened lack a real voice. They may be blamed for their failures by those who ignore the role coincidence plays in the upward trajectories of the successful.

Nassim Taleb writes of our tendency to ignore the failures: “We favor the visible, the embedded, the personal, the narrated, and the tangible; we scorn the abstract.” Business books laud the rule-breakers who ignore conventional advice and still create profitable enterprises. For most entrepreneurs, taking excessive risks and eschewing all norms is an ill-advised gamble. Many of the misfit billionaires who are widely celebrated succeeded in spite of their unusual choices, not because of them. We also ignore the role of timing, luck, connections and socio-economic background. A person from a prosperous family, with valuable connections, who founds a business at a lucrative time has a greater chance of survival, even if they drop out of college or do something unconventional. Someone with a different background, acting at an inopportune time, will have less of a chance.

In No Startup Hipsters: Build Scalable Technology Companies, Samir Rath and Teodora Georgieva write:

Almost every single generic presentation for startups starts with “Ninety Five percent of all startups fail”, but very rarely do we pause for a moment and think “what does this really mean?” We nod our heads in somber acknowledgement and with great enthusiasm turn to the heroes who “made it” — Zuckerberg, Gates, etc. to absorb pearls of wisdom and find the Holy Grail of building successful companies. Learning from the successful is a much deeper problem and can reduce the probability of success more than we might imagine.

Examining the lives of successful entrepreneurs teaches us very little. We would do far better to analyze the causes of failure, then act accordingly. Even better would be learning from both failures and successes.

Focusing on successful outliers does not account for base rates. As Rath and Georgieva go on to write:

After any process that picks winners, the non-survivors are often destroyed or hidden or removed from public view. The huge failure rate for start-ups is a classic example; if failures become invisible, not only do we fail to recognise that missing instances hold important information, but we may also fail to acknowledge that there is any missing information at all.

They describe how this leads us to base our choices on inaccurate assumptions:

Often, as we revel in stories of start-up founders who struggled their way through on cups of ramen before the tide finally turned on viral product launches, high team performance or strategic partnerships, we forget how many other founders did the same thing, in the same industry and perished…The problem we mention is compounded by biographical or autobiographical narratives. The human brain is obsessed with building a cause and effect narrative. The problem arises when this cognitive machinery misfires and finds patterns where there are none.

These success narratives are created both by those within successful companies and those outside. Looking back on their ramen days, founders may believe they had a plan all along. They always knew everything would work out. In truth, they may lack an idea of the cause and effect relationships underlying their progress. When external observers hear their stories, they may, in a quasi-superstitious manner, spot “signs” of the success to come. As Daniel Kahneman has written, the only true similarity is luck.

Consider What You Don’t See

When we read about survivorship bias, we usually come across the archetypical story of Abraham Wald, a statistician studying World War II airplanes. His research group at Columbia University was asked to figure out how to better protect airplanes from damage. The initial approach to the problem was to look at the planes coming back, seeing where they were hit the worst, then reinforcing that area.

However, Wald realized there was a missing, yet valuable, source of evidence: Planes that were hit that did not make it back. Planes that went down, that weren’t surviving, had much better information to provide on areas that were most important to reinforce. Wald’s approach is an example of how to overcome survivorship bias. Don’t look just at what you can see. Consider all the things that started on the same path but didn’t make it. Try to figure out their story, as there is as much, if not more, to be learned from failure.

Considering survivorship bias when presented with examples of success is difficult. It is not instinctive to pause, reflect, and think through what the base rate odds of success are and whether you’re looking at an outlier or the expected outcome. And yet if you don’t know the real odds, if you don’t know if what you’re looking at is an example of survivorship bias, then you’ve got a blind spot.

Whenever you read about a success story in the media, think of all the people who tried to do what that person did and failed. Of course, understanding survivorship bias isn’t an excuse for not taking action, but rather an essential tool to help you cut through the noise and understand the world. If you’re going to do something, do it fully informed.

To learn more, consider reading Fooled By Randomness, or The Art of Thinking Clearly.

The Ethics of Business

After reading the passage below in The Meaning of Stoicism, I needed to learn more.

“It goes without saying that such a professional ethics is not restricted to craftsmen and artisans and members of a profession. In the Stoic’s opinion, business too has an ethics of its own. To make as much money as one needs is fair but to steal it from another what is his is against the human law, said Chrysippus (one of the main Stoics); and in the famous debate between Antipater and Diogenes the rights of the seller and the buyer are scrutinized: must the seller point out all of the faults of his wares? Is he obliged to live up only to the laws of the country in which he happens to do business or must he always be mindful of the common nature of man and the common natural law that protects all?

The source for that was Cicero’s De Officiis III, and the questions are fascinating because they call into question our role … as an individual and as a member of society. What do the Stoics feel we should do when the useful conflicts with the honorable?

Here are Cicero’s words on the relevant passage.

“As an example of situations of this kind, let us assume that a good man has shipped a large cargo of corn from Alexandria to Rhodes at a time when the Rhodians were suffering shortage and hunger, and grain was extremely expensive. Assume too that he knew that several merchants had put out from Alexandria, and that he saw their ships laden with corn on course making for Rhodes. Should he report this to the Rhodians, or without divulging the fact, sell his own cargo at the highest possible price? I am assuming that he is wise and honest; the question I pose concerns the debate and discussion he has with himself, for he would not conceal the news from the Rhodians if he thought this dishonest, but he would be uncertain whether it was dishonest or not.

In such cases as this Diogenes of Babylonia, the eminent and austere Stoic, takes a different line from that of his pupil Antipater, a most incisive thinker. Antipater believes that all the facts should be divulged, so that the buyer is kept unaware of absolutely nothing which is known to the seller. Diogenes on the other hand believes that the seller is obliged to report any defects in his goods, in so far as the civil law prescribes, and to conduct the transaction otherwise without chicanery, but since he has goods to sell, he should sell them at the best possible price.

“I have shipped them, and I have set out my stall; I charge no more for my goods than anyone else does.” My price may even be lower when stocks are more plentiful. Who is getting a bad deal?”

Antipater mounts the opposing argument. “Are you serious? Your duty is to have the interest of men at heart, and to promote human fellowship. From birth you were bound by the law of nature and you inherit her principles which you are to obey and observe. They prescribe that your interest is the interest of the community, and conversely, the interest of the community is yours. So will you conceal from your fellow men the availability and abundance which they have at hand?”

Diogenes will perhaps respond: “Concealment is one thing, and silence is another. At this moment I do not conceal anything from you by failing to inform you of the nature of the gods or the highest good, knowledge of which would be of greater value to you than wheat at a low price. I am under no obligation to tell you what it is in your interest to hear.”

“On the contrary,” Antipater, will say, “you are under an obligation, for you recall that nature has joined all men in alliance.”

“I do recall that,” Diogenes will reply, “but the alliance you mention is surely not the kind that forbids a man to possess anything of his own If it does so forbid, then nothing should be put up for sale at all; everything should be given away.”

In this whole discussion, you see, no one says, “Though this is dishonorable, I will do it because it is in my interest.” Rather, the one side argues that the action is advantageous without being dishonorable, and the other argues that it should not be performed because it is dishonorable.

The answer, then seems to be that … concealment is not just reticence, for by it you seek to further your own interests by ensuring that your knowledge remains hidden from those who would benefit from it. Is there anyone who does not see the nature of this kind of concealment, and the sort of man who practices it? He is certainly not an open or straightforward person, decent, or just, or honest; on the contrary, he is crafty, devious, sharp, deceitful, malicious, cunning, wily, and artful.

Technology is starting to make this sort of information asymmetry harder. Today, the Rhodians would know there were more ships on the way, how much grain they held, and when they’d arrive. This, argues Daniel Pink, changes how we sell.

The Stoic Reading List: Aurelius, Seneca, Epictetus and More

“The impediment to action advances action. What stands in the way becomes the way.”

— Marcus Aurelius

You know the section of the book after the last chapter? The one that everyone ignores? That’s one of the first things I read as part of a systematic skimming, which allows me to get a feel for the author’s vocabulary, a sense of what the book is about, and references and sources. It’s also a good place to find new reading material.

In the back of The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph I came across something I wish I had found a few years ago when I first started reading philosophy, a stoic reading list.

The Stoic Reading List

Stoicism is awesome because the original, primary texts are often easier to read than whatever has been put out since. This is why we’ve read the same books for thousands of years.

The Big Three.

1. Meditations by Marcus Aurelius.

I loved this book. I had read it before but it wasn’t the Hays translation, which made a world of difference for me.

There is one translation of Marcus Aurelius to read and that is Gregory Hays’s amazing edition for the Modern Library. Everything else falls sadly short. His version is completely devoid of any “thou’s” “arts” “shalls.” It’s beautiful and haunting. I’ve recommended this book to literally thousands of people at this point. Buy it. Change your life.

2. Letters of a Stoic by Seneca (see also: On the Shortness of Life).

This is one of the 5 books I recommend everyone read before their 30th birthday.

Seneca or Marcus are the best places to start if you’re looking to explore Stoicism. Seneca seems like he would have been a fun guy to know—which is unusual for a Stoic. I suggest starting with On the Shortness of Life (a collection of short essays) and then move to his book of letters (which are really more like essays than true correspondence).

3. Discourses by Epictetus.

Of the big three, Epictetus is the most preachy and least fun to read. But he will also from time to time express something so clearly and profoundly that it will shake you to your core.

More Books

Holiday points us to some other great authors too, who are in line with some stoic thinking.

To which, you can add:

Selected Articles and online resources:

The Surprising Ways Friends Make Us Who We Are

“Friendships are the least institutionalized and most voluntary social relationship we have.”

In Friendfluence: The Surprising Ways Friends Make Us Who We Are, Carlin Flora explores “the powerful and often unappreciated role that friends—past and present—play in determining our sense of self and the direction of our lives.”

What is Friendship?

Friendships are the least institutionalized and most voluntary social relationship we have. Our friends can cycle in and out of our hearts and calendars; they can be our “everything” or just a refreshing anomaly, a small pop of color in a busy social landscape. Amorphous in nature, friendship fills in the cracks left open by our personalities, or backgrounds, or temporary circumstances. Friends adapt to our needs and styles, and we to theirs. Perhaps we’ll never arrive at a precise definition, but descriptions of true friends can bring a jolt of recognition.

De Amicitia
Cicero, in somewhere around 44 BC, wrote De Amicitia, a beautiful piece on friendship. In it, he writes:

[H]ow can life be what Ennius calls “the life worth living,” if it does not repose on the mutual goodwill of a friend? What is sweeter than to have someone with whom you may dare discuss anything as if you were communing with yourself? How could your enjoyment in times of prosperity be so great if you did not have someone whose joy in them would be equal to your own?

Cicero defines friendship as “complete sympathy in all matters of importance, plus goodwill and affection.”

Montaigne was no stranger to friendship either. He penned a work on the subject “Of Friendship,” in 1580. Portraying his usually strong bond with Étienne de La Boétie.

Friendship as Love

The closest of friendships contain the mysterious spark of attraction and connection as well as drama, tension, envy, sacrifice, and love. For some, it’s the highest form of love there is.

Predicting Friendship Duration

The longer you are friends with someone, the more likely you’ll continue to be friends. Time spent as friends is the best predictor of friendship longevity.

Parenting and Creating a Sense of Entitlement
While The Secrets of Happy Families primarily concerns the present happiness of your family, long term implications need to be considered. Maximizing the short term at the cost of the long term needs to be considered. Often what’s great in the short term creates horrible outcomes. For instance, you could go shoot meth right now. You’d wreck your life, but it’d be a great few hours to start.

Some researchers believe that parents who were concerned more with being “liked” as a friend than with being respected as a leader caused the uptick in feelings of entitlement and narcissistic traits among today’s young people, compared to the youth of 1979.

What Does Friendship Mean to You?

If I ask you, “What does friendship mean to you?” you might say loyalty or compatibility, in the abstract. However, if I ask you why eight different people are your friends, I’ll bet you would describe their individual qualities, the circumstances in which you met, and the traits they tend to bring out in you— this one invites you to fun parties and that one challenges you to be a better person. In other words, asking people to define friendship in the first place is a bit like asking people to define flowers. Friends have baseline characteristics just as flowers are basically the blossoms of a plant, but beyond that they are unique and thrive under very different conditions.

As hard to grasp as it is, friendship brings with it a host of benefits to mood and health.

Solid friendships can help you shed pounds, sleep better, stop smoking, and even survive a major illness. They can also improve memory and problem-solving abilities, break down prejudices and ethnic rivalries, motivate people to achieve career dreams, and even repair a broken heart.

We are generally unaware that our friends influence everything “from our basic linguistic habits to our highest aspirations.” The converse is also true. Without friends it’s easier to spiral downward.

[H]aving few social ties is an equivalent mortality risk to smoking 15 cigarettes a day and even riskier than being obese or not exercising!

Evolution and Friends

Evolutionary psychologists theorize that friendship has roots in our early dependence on others for survival. Having a friend help you hunt, for instance, made it more likely that you and your family—and your hunting buddy and his family—would have food cooking over the fire.

Just because we don’t build fires and hunt in packs doesn’t mean we don’t need friends today.

Anthropologists have found compelling evidence of friendship throughout history and across cultures. Universally, we’re built to care deeply about select people outside of our kin group. It’s hard to construct a personal life history that doesn’t include important parts for one’s friends.

Sociologist Eric Klinenberg points out that “more people live alone now than at any time in history.” So the argument goes that if more people are living outside of traditional family structures friends become even more important.

More than for single people, friendships often help marriages.

Friends are also important for parents and those who are married or living with a romantic partner. Time with friends is actually our most pleasant time: We are most likely to experience positive feelings and least likely to experience negative ones when we are with friends compared to when we are with a spouse, child, coworker, relative, or anyone else. We’re not surprised when we hear people grumbling about how they have to attend a family holiday party, yet it would puzzle us to hear the same people complain about having to go to a celebration full of their friends.

Friends or Families?
Why do we prefer spending time with our friends over our families?

Some say it is because we pick our friends (God’s consolation prize) while we don’t pick our families. Insofar as we choose our spouses and decide to have children, we do have some say over our families. More likely, our time with our pals is more enjoyable because of our expectations. When we’re with friends, we bring sympathy and understanding and leave out some of the grievances we carry into interactions with family members. We tend to demand less from friends than we do from relatives or our romantic partners, and each friend provides us distinct benefits.

Busy Parents Should Stop Considering Friendships a Nonessential Luxury.

When working parents devote every scrap of free time to their children, their friendships are the first thing to slide. We know from research (and our own intuition quickly confirms this) that expecting one’s spouse to be everything is a recipe for disaster. Leaning on friends for intellectual stimulation, emotional support, and even just fun activities relieves the pressure of the overheated nuclear family. Busy moms and dads would do well to stop considering friends to be a nonessential luxury.

Time With Friends

The more friends want and enjoy our company, the more we tend to enjoy theirs, whereas lovers sometimes become more desirable the more they pull away from us.

Friends Make Work Better

If you can count at least three dear friends at the office, you are 96 percent more likely to be extremely satisfied with life in general.

As the role of friendship seems to expand in our culture, Friendfluence: The Surprising Ways Friends Make Us Who We Are, offers a look at the often under-appreciated influence it has on “our personalities, habits, physical health, and even our chances of success in life.”

5 Things Cicero Can Teach You About Winning An Election

In 64 B.C Marcus Tullius Cicero was running for the post of Roman consul.

Cicero, a political outsider, was a brilliant man and gifted speaker with a burning desire to gain the highest office in the ancient republic.

As the campaign approached, his brother Quintus wrote to him offering some advice on how to win the election that would make Machiavelli proud.

“My dear Marcus,” he wrote, “you have many wonderful qualities, but those you lack you must acquire, and it must appear as if you were born with them.”

Quintus knew that the odds were against his brother: “To speak bluntly, since you are seeking the most important position in Rome and since you have so many potential enemies, you can’t afford to make any mistakes. You must conduct a flawless campaign with the greatest thoughtfulness, industry and care.”

In a short pamphlet, Quintus laid out an election plan for Marcus that still rings as true today as it did 2,000 years ago.

Here is a sampling of his political wisdom:

1. Promise everything to everyone. Quintus says that the best way to win voters is to tell them what they want to hear: “Remember Cotta, that master of campaigning, who said he would promise anything, unless some clear obligation prevented him, but only lived up to those promises that benefited him.” As Quintus says, people will be much angrier with a candidate who refuses to make promises than with one who, once elected, breaks them.

2. Call in all favors. If you have helped friends or associates in the past, let them know that it’s payback time: “Make it clear to each one under obligation to you exactly what you expect from him. Remind them all that you have never asked anything of them before, but now is the time to make good on what they owe you.” If someone isn’t in your debt, remind him that if elected, you can reward him later, but only if he backs you now.

3. Know your opponent’s weaknesses—and exploit them. Quintus practically invented opposition research: “Consider Antonius, who once had his property confiscated for debt…then after he was elected as praetor, he disgraced himself by going down to the market and buying a girl to be his sex slave.” A winning candidate calmly assesses his opponent and then focuses relentlessly on his weaknesses, all the while trying to distract voters from his strengths.

4. Flatter voters shamelessly. Quintus warns his brother: “You can be rather stiff at times. You desperately need to learn the art of flattery—a disgraceful thing in normal life but essential when you are running for office.” A candidate must make voters believe that he thinks they’re important. Shake their hands, look them in the eye, listen to their problems.

5. Give people hope. Even the most cynical voter wants to believe in someone: “The most important part of your campaign is to bring hope to people and a feeling of goodwill toward you.” Voters who are persuaded that you can make their world better will be your most devoted followers—at least until after the election, when you will inevitably let them down.

Still curious? Read the original (translated) “On running for the Consulship” and also How to Win an Election: An Ancient Guide for Modern Politician.

Source: WSJ