The Base Rate Fallacy
The cost of information precision
When you meet a super introvert and quiet person and are asked to guess their job, what’s your guess?
A) Librarian
B) Salesperson
Easy, right? Librarian. Most librarians are introverts and quiet.
Sure.
And most salespeople are extroverted and loud.
Sure.
And you’d still be wrong (likely).
Because: Base Rates.
What Is the Base Rate Error?
When we focus on specific details (like introversion), we often ignore the base rate—the overall frequency of events or categories in the population. This leads us to overestimate the importance of the detail and misjudge the true odds.
Example 1: Librarian or Salesperson?
Specific Info: The person is introverted.
Your Gut: Introverts = librarians.
Missing Piece: There are 20× more salespeople than librarians.
Librarians
Total People: 50,000
Introverts: 50%
#Introverts: 25,000
Salespeople
Total People: 1,000,000
Introverts: 5%
#Introverts: 50,000
There are twice as many introverted salespeople as introverted librarians. So even if a librarian is much more likely to be an introvert than a salesperson, any introvert you meet is twice as likely to be a salesperson.
Example 2: COVID Hospitalizations
Specific Info: 50% of hospitalized patients are vaccinated.
Your Gut: Vaccination = no protection.
Missing Piece: 80% of the population is vaccinated.
Vaccinated
Population: 80%
Hospitalized: 50%
Relative Risk: 0.625x
Unvaccinated
Population: 20%
Hospitalized: 50%
Relative Risk: 2.5x
Unvaccinated people are 4× more likely to be hospitalized, despite equal shares in hospital counts.
Why You Should Care
In Business: Ignoring base rates can tank decisions about products, markets, or investments.
In Health: Misinterpreting risks leads to panic or complacency (both dangerous).
In Life: You could seriously underestimate or overestimate your odds of success.
Specific facts are seductive—but without the base rate, they will deceive you. Always ask “compared to what?” and pair specific data with the broader context—total population or historical frequency.
Understanding the Base Rate Fallacy will help you dodge misleading statistics, make smarter decisions, and see the world with clearer odds.
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