In Finance, What Is Survivorship Bias?

Survivor bias, translated as "survivor bias" or "survivor bias", is a common logical fallacy. It means that you can only see the results after a certain screening, but you are not aware of the screening process, so you ignore the key information that is filtered out. Everyday expression is "silent data", "dead cannot speak" and so on. Controlled trials and Bayesian formulas can be used to eliminate survivor bias.

Survivor bias

Survivor bias means that when the source of information comes only from the survivor (because the dead can't speak), this information may have deviations from the actual situation. The same rule applies to the financial and commercial fields. Surviving companies are often viewed as "legends," and their approaches are being followed. In fact, some of them may have survived only by accident.

In daily life, the most obvious examples are "my relatives have taken this medicine" or "a friend went to this doctor" and so on. No matter how good your relatives and friends are with you, how trustworthy and respectful they are, they are all equal in the face of objective laws. Illness and medicine will not take care of or favor your relatives or friends because of your preferences. The so-called "

Survivor Bias Reading Uselessness

Nowadays, many people are saying that whoever did nt go to school well now earns a lot of money, and a lot of people who study hard are not as good as those who did nt study well after graduation. And because there are so many examples, many people come to the conclusion that "school is useless" and "reading is useless."

These are just examples, because the cardinality is too large, so it looks like a lot . According to the official caliber of the sixth national census in 2010, it can be calculated that the population with a college education level or above only accounts for about 8.7% of the total population. It can be seen that the number of people with low education is much higher than the number of people with high education, so even if the success rate of people with low education is far lower than those with high education, it will still lead to a large number of successful people with low education.

For high-educated people, ordinary people will pay attention to both successful and unsuccessful people, and those with high-educated but disappointed people will be particularly concerned, and they will be easily reported as news. For low-educated people, ordinary people often only Concerned about the successful people, and ignored the low-level and unsuccessful people. It is because of ignoring these "silent data" that the false conclusion that "reading is useless" is produced.

Survivor biases business versus art

Nowadays, in the film, television, novel or ACG circles, many people hold the view that there are many up-and-coming works, good looks, and high art. Popular works are commercial, not good-looking, low art (or no art). Business and art are antithetical.

Let's not talk about whether art is superior or not, let's suppose it. In fact, this kind of person makes a mistake. The upset works they pay attention to are usually only a few excellent upset works that are passed on by word of mouth, ignoring the vast number of unknown upset works, and those outstanding upset works are basically filtered out of the majority of upset works . Popular works are different, whether they look good or not, they will receive widespread attention.

Taking movies as an example, according to the statistics of the IMDB database, today there are about 400,000 movies (feature, excluding short films, documentaries, etc.), and today nearly 10,000 movies are released every year. Of these hundreds of thousands of films, the box office is only a small part of the high. That is to say, many people compare this small number of popular movies with a large number of upset movies to art, and not to the average, but to the quantity.

Or even though it is better than the average, it compares the popular works with the excellent unpopular works that are spread by word of mouth. These well-received unpopular works are actually only a small part of the vast unpopular works (it is unlikely that someone will put nearly 400,000 All movies have been watched). As for those unpopular works with bad reputation, they have been screened out because they have not heard of it and have not watched them. They are definitely hotter than the average. From this, it is obvious that the high artistic conclusion of Lianmen's works is obviously unscientific, just like "the theory of useless reading".

Most people who think that "business and art are antithetical" think that the audience is stupid and easy to follow blindly. In fact, the audience is not a fool , at least it is about the same level of people who ignore the "survivor's bias" and draw a fallacy. Popular works usually have their highlights, such as some good-looking stories, some great scenes look great, some stars or famous guides, some good publicity and so on. After the movie is broadcast, there will also be audiences (or celebrities and influencers) for free publicity: "XXX is good-looking, everyone goes to watch", "XXX is not good-looking, do nt watch (or watch carefully)". Audience's word of mouth also affects sales. In the case of official propaganda and other factors, the level of popular movies is actually higher than the upset. That is to say, business and art are not only not opposite, but also positively related .

For example, the box office of the film "The Godfather" is about 250 million U.S. dollars. Some people may say that the box office is not high, and XXX is not good-looking, but also ranked in front of him. However, there are hundreds of thousands of movies behind the "The Godfather". The Godfather has already It's the best at the box office. The box office has more movies than The Godfather. And "The Godfather" was the box office champion in 1972, ranking 23rd in the ranking considering inflation. If business and art are antithetical, isn't The Godfather the worst movie of 1972?

Why are there so many bad movies? Because there are nearly 10,000 movies released every year, that is to say: not the popular works are low in art, but there are always a few popular works in low works.

These low-artistic but popular works have been constantly brought out to be popular, while the vast number of low-artistic and unpopular "silent data" has been ignored, causing many people to have the wrong view of "business and art opposition".