Fooled by the Winners: How Survivor Bias Deceives Us

by David Lockwood

Overview

Fooled by the Winners will change the way you think about the stock market, health care, global warming, diets, lotteries, restaurants, and your siblings. It will reshape your perspective of the past and give you a clearer view of the future.

Fooled by the Winners is a book about survivor bias, the cognitive error of focusing on the winners, the successes, and the living. But in many instances, we can learn more from those who have lost, failed, or died.

After reading this book, you will understand how survivor bias is often used to deceive us. You will learn how to stop paying for financial services that promise more than they deliver, for health care that doesn’t make us healthier, for diets that don’t make us slimmer, and for advice books that don’t offer good advice. You will also come away with a different view of our past, including our perilous evolutionary journey and how history has often been written by the winners. You will come to understand how we are fooled by the winners in warfare, such as in the deployment of nuclear weapons and the most famous example of survivor bias—the missing Allied bombers of WWII.

Previous studies of survivor bias have been inaccessible to most, housed in formula-laden statistical journals. But you won’t find any math or technical jargon here. David Lockwood, a former member of the faculty of the Graduate School of Business at Stanford University, applies the concept of survivor bias to specific, real-world examples—minus the equations.

Through compelling analysis and the real-life stories, this book demonstrates the deceptive influence of survivor bias in our daily lives and on our thinking.

Product Details

ISBN-13:	9781626348806
Publisher:	Greenleaf Book Group Press
Publication date:	11/09/2021
Pages:	296
Product dimensions:	6.00(w) x 9.00(h) x (d)

About the Author

David Lockwood is a former lecturer on the faculty of the Graduate School of Business at Stanford University. He has three decades of experience as a senior executive on Wall Street and in Silicon Valley and has served on more than twenty public and private company boards. In addition, he has been an advisor to the highest levels of the US government. He currently resides in the Western Rockies with his wife and three children.

Table of Contents

Introduction Ships, Sailors, and Prayers 1

Part I

Chapter 1 Financial Services: So Much for So Little 9

Chapter 2 Strategy and Self-Help Books: Bad Advice 25

Chapter 3 Against the Odds: ESP, Lotteries, and Restaurants 39

Chapter 4 Medicine: Unhealthy Confidence 47

Chapter 5 Warfare: Bombers, Helmets, and Tourniquets 67

Chapter 6 History: Winners Hold the Pen 83

Part II

Chapter 7 Evolution: The Last Humans 107

Chapter 8 Nuclear War: Dumb Luck 125

Chapter 9 Climate Change: Hot and Parched 153

Chapter 10 Fermi's Paradox: Where Are They? 179

Chapter 11 Quantum Mechanics: Nobody Understands 197

Epilogue 213

Acknowledgments 217

References 219

Notes 237

Index 261

About the Author 269

What People are Saying About This

From the Publisher

"Fooled by the Winners by David Lockwood is one of the most intriguing, enlightening, and disturbing books I have ever read.” 
— Readers' Favorite

“Engaging, lucid and thought-provoking. Lockwood will prompt you to rethink how you invest, run a company, diet, deal with siblings and tackle social issues.  By the end of the book, you’ll see the world through a different lens.”
— Joel Peterson, Professor of Management, Graduate School of Business at Stanford University, author of Entrepreneurial Leadership and The 10 Laws of Trust
“A fascinating and entertaining look at one of the most important sources of error in human judgment. I loved it and learned a lot.”
— Gary Smith, Professor of Economics, Pomona College, author of Standard Deviations, What the Luck, and The AI Delusion

"Lockwood's clear and brisk style breaks down complex ideas ...readers eager for a better grasp on complex mathematical principles or who enjoy big ideas will find this an accessible explanation of survivor bias and how it can cloud our thinking."
— BookLife by Publishers Weekly

"Fooled by the Winners is a digestible and compelling social science text that uses a bevy of examples to urge people to reexamine the stories they've been told by and about society's winners."
— Foreword Clarion Reviews

"An eye-opening account of an irrational mistake with broad implications…Lockwood sets out to provide an accessible introduction to survivor bias, one shorn of academic jargon and instead reliant on “concrete real-world examples., and in this he roundly succeeds.  Further, he makes a compelling case for the ubiquity of the error, one that has far-reaching consequences, causing both sloppy reasoning and the opportunistic exploitation of individuals and groups.”
— Kirkus Review

Editorial Reviews

09/20/2021

Lockwood explores one of the most common cognitive biases, survivor bias, which he describes as the tendency to “Concentrat on the people or things that made it past some selection process and overlooking those that did not.” He posits that we need to understand both the survivors and the casualties in situations to develop a “clear view of the future” and to ensure our survival as a species. “o be a survivor, we must not be fooled by the winners,” he argues. To illustrate this, he delves into varied teaching examples, including the hedge funds that succeed instead of failing–to assess potential risk, you should consider all an investment firm’s hedges, not just the profitable ones–as well as military bombers that don’t get shot down versus those that crash, and the evolutionary history of modern humanity itself, in contrast to earlier species who didn’t survive.

Lockwood analyzes survivor bias from two key perspectives, that of observers outside of the set of survivors and that of observers who are part of the survivor group, concluding that both perspectives are misleading in different ways. External observers can fall prey to mistakes such as overestimating the chances of a mutual fund’s success or believing in outside causes like ESP, while members of a survivor group are likely to underestimate the potential for future catastrophes, like nuclear war or climate change, simply because they have not happened yet. Lockwood cautions that observing these global risks clearly is necessary in order to effectively counter them.

Lockwood’s clear and brisk style breaks down complex ideas, and his past experience as a lecturer at Stanford, as well as on Wall Street and in Silicon Valley, serves him well in making his case.Curious readers eager for a better grasp on complex mathematical principles or who enjoy big ideas will find this an accessible explanation of survivor bias and how it can cloud our thinking.

Takeaway: Readers looking for a big idea or to reduce their own cognitive bias will find this exploration of survivor bias illuminating.

Great for fans of: Nassim Nicholas Taleb’s Black Swan, Leonard Mlodinow’s The Drunkard’s Walk.

Production grades Cover: A Design and typography: A Illustrations: B- Editing: A Marketing copy: B

BookLife Reviews

2021-09-09
A panoramic study focuses on survivor bias, a pervasive failure of reason that deeply distorts people’s views of the world.

According to Lockwood, survivor bias—a “cognitive failure” that involves a myopic overemphasis on success to the relative exclusion of failure—encourages all kinds of inferential missteps. “We are misled because we focus on the winners, the successes, and the living and lose sight of those who have lost, the failures, and the dead. By failing to adjust for survivor bias, we reach the wrong conclusions,” the author asserts. Psychologically, the tendency toward survivor bias results from an excess of optimism, the inclination to “attribute success to skill rather than luck,” to believe in the power of expert effort over the vagaries of chance. Lockwood supplies a sweeping account of the expressions and effects of the bias, ranging from the pharmaceutical and financial industries to war. For example, drug companies routinely oversell the efficacy of their products by excluding contradictory data, just as hedge funds overstate their performances by neglecting to mention their numerous failures. Moreover, survivor bias “warps our view of the past”—this explains why the horrors committed by Hitler’s Germany are so well documented in comparison to those by Mao’s China. The author’s account is impressively comprehensive, though the wide-ranging scope of the study doubles as a vice since he’s committed to assessing an array of topics beyond his expertise. For example, his discussion of President Harry S. Truman’s decision to drop two atomic bombs on Japan is historically superficial and unconvincing. Nevertheless, Lockwood sets out to provide an accessible introduction to survivor bias, one shorn of academic jargon and instead reliant on “concrete, real-world examples,” and in this he roundly succeeds. Further, he makes a compelling case for the ubiquity of the error, one that has far-reaching consequences, causing both sloppy reasoning and the opportunistic exploitation of individuals and groups.

An eye-opening account of an irrational mistake with broad ramifications.

Kirkus Reviews