Tuesday, September 24, 2013

Probability Vs Possibility

People who know me well know about my fierce and longstanding intellectual allegiance to Nassim Taleb of Fooled By Randomness and Anti-Fragile fame. I claim indie-fan cred for jumping on the bandwagon after reading the original Malcolm Gladwell article about his anti-fragile hedge fund, Empirica - before Black Swan was published.

Most people, lay, journalists, experts, economists still have a hard time with the difference between what's probable and what's possible.

Today, I noticed a small example from daily life, that almost anyone should be able to understand:

I was doing work on my laptop at a coffee shop this morning and had to use the bathroom. I thoughtfully waited until the bathroom was empty, then left my laptop on the table, got up, and made sure to return quickly. The time I was away wasn't more than 30 seconds. In this situation, I am quite confident that it is very unlikely - improbable - that someone steals my laptop, so I don't feel like it's a big risk.

However, this in no way makes it less possible for someone to steal my laptop while I am gone. Those 30 seconds could coincide with a thief coming into the shop just as easily as any other 30 seconds in the day. A thief who sat near me and waited and watched for me to get up with the express intent of stealing my laptop could easily take it. The possibility of theft is not reduced, even though I feel good about the low probability of theft occurring.

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