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Viliam60

A specific example: how safe is it to use a condom? When you look at the statistics of pregnancies per user per year, it is important to understand that a person who says "uhm, I usually use condoms, but I kinda forget to put one on at 50% of occassions" is still classified as a condom-user. So the safety for you is probably much better than the statistics suggests.

Another example: homeschooling. Seems to me there are essentially two types of homeschooling families: smart conscientious people who want to give their kids better education than the school system typically provides; and religious or other fanatics who want to protect their kids from exposure to sinful information. If you consider homeschooling your kids and look at statistics, it is important to realize that they are based on the average of these two groups, so your chances are better.

In both cases, the problem with looking at statistics for group B is that the group B has a big variance, and you have a good reason to believe you are much better than the average of B. (The group A may be better on average, but maybe it has much smaller variance, or maybe just you personally don't have the same kind of advantage in A that you have in B.)

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I see lots of situations where let's say, Mike is aware that either method A and method B that can be used to carry out a task. 

Observational data shows that on average, system A outperforms system B, so seeing this, Mike decides to use system A.

But, the best ever result on the task was achieved with system B, and the conditions under which that was achieved could be easily replicated.

So really, Mike would be better off using system B and replicating those exact conditions - Mike could have cherry picked and recreated the best scenario, but made a decision based on averages instead.

Is there a term for this? And if not, what should the term be?

 

 

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Is there a term for 'the mistake of making a decision based on averages when you could cherry picked instead'?
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bluefalcon

60

Choosing the wrong reference class? 

A version of this type of situation seems to cover a lot of career decisions made by sufficiently talented people. If you're a young Mark Zuckerberg, should you drop out of Harvard? Dropping out of college is a bad idea, on average. It's not quite as clear cut as OP suggested because you can't reliably replicate what Bill Gates did, but there may be strong indicators that startup founders, or some more specific subclass like startup founders experiencing x% monthly growth in recurring users, and not the average college dropout, is the reference class you should look out. And maybe an experienced startup or VC person could point one to an even better reference class that wouldn't occur to me.

Dagon

40

Perhaps related to https://www.lesswrong.com/tag/inside-outside-view , as kind of the opposite of the planning fallacy.  If you don't look at averages, or if you deny that your context is more similar to the common case than the special case, you'll be massively overconfident.  If you ONLY look at averages and don't consider how you can choose the environment or context (to some degree), you'll miss out on opportunities to improve.

I think the only real answer is in the specifics of strategy A (best in the common case, with common levels of ability and effort) and strategy B (best for at least some cases), to determine which is best for your abilities and needs.

[ note: I mentally replaced the word "average" with "median" or "common" in your post.  Averages for non-symmetrical distributions can be very misleading, and basically should never be used for this kind of comparison. ]

greylag

20

Nominate “statisticians’ duck hunt”, after this joke

Three statisticians go duck hunting. They see a duck and the first statistician shoots, hitting two feet to the left of the duck. The second statistician shoots, hitting two feet to the right of the duck. The third statistician leaps up in joy, yelling, "We got it!"

jmh

10

Seems like a form of a fallacy of composition error. Might also be a category error in thinking the aggregate statistic that offers a (part of the) description about the distribution of the whole can be seen as representing meaningful information about individual elements.

Andrew Vlahos

10

I don't think there is a term, and don't think there needs to be one. If someone else disagrees with me that's fine, but situations where 

1: you can consistently do far better than average by doing system B in a certain way

2: most people who use system B do worse

are so rare that it doesn't need a term. Unless you can think of several specific examples?

[-]Viliam60

A specific example: how safe is it to use a condom? When you look at the statistics of pregnancies per user per year, it is important to understand that a person who says "uhm, I usually use condoms, but I kinda forget to put one on at 50% of occassions" is still classified as a condom-user. So the safety for you is probably much better than the statistics suggests.

Another example: homeschooling. Seems to me there are essentially two types of homeschooling families: smart conscientious people who want to give their kids better education than the school sys... (read more)

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9cousin_it
Haha, I just realized that can be true no matter which group you're in. If you want to give your kids better education, statistics will say homeschooling isn't great at that; if you want to protect your kids from sin, statistics will say homeschooling isn't great at that either; but your chances of achieving your goal, whichever of the two it is, are better than statistics suggest. I wonder where else this kind of quirk happens.
1Andrew Vlahos
Good point, I didn't consider statistical bundling. Actually, I don't think statistical bundling is a commonly recognized term, but I see the use of it now.
[-]Ericf50

Examples:

  1. Pitching overhand vs sidearm in baseball.
  2. Net decking vs custom building in Magic The Gathering (before 2010)
  3. Buying index funds vs picking stocks (after doing Berkshire Hathaway levels of research)
  4. Not gambling vs playing blackjack (as part of a card-counting bet-variance team)
  5. Shooting a basketball from the floor vs dunking (if you're tall enough)

In general: Doing things the same way that worked in the past vs doing something different. Most mutations are deleterious, but doing things in the correct different way can have big benefits.

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[-]lsusr20

Paul Graham's article Beating the Averages comes to mind.

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