The Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty

CHAPTER 6

MINDles Are to MINDs What HANDles Are to HANDs

Over the years I have tested thousands of university students and midlevel executives on the basic principles of modeling uncertainty and risk. I have found that teaching probability and statistics is easy. The hard part is getting people to learn the stuff. It helps to bring one’s audience to a common level of understanding; so toward that end I will start with a brief history of civilization.

1. Humans learn to read and write. Knowledge is preserved from generation to generation.

2. Humans invent machines. This culminated in the Industrial Revolution, which involved harnessing the power of physics. At the pinnacle of this era is the field of either physics or mathematics (depending on whether you ask a physicist or mathematician), followed by engineering. Below engineering is the often ignored field of industrial design, which is devoted to the development of Handles that allow us to grasp the power of physics with our hands.

The industrial designers are not Nobel Prize winners, but ultimately they are the enablers of the Industrial Revolution.

3. Machines learn to read and write. During World War II machines began to both read and write information using electrical impulses, and the theoretical foundations of computer science were laid. I would call this the start of the Informational Revolution, and by all accounts we are ...