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“They don’t make them like they used to” is used so often that you probably had no idea that it is an excellent example of “Survivorship Bias.”
Survivorship bias is the tendency for what we see to be influenced by what we don't see. When you see beautiful examples of classic cars or beautiful old homes, you only see those that have survived to the present day. Not the hundreds of thousands that were junked, destroyed, or torn down. You are not comparing them to ALL the cars or homes made in their time period.
Similarly, we often analyze the success stories of the best companies or those entrepreneurs that rose from nothing to great business success. What about the thousands of people and companies that failed, stayed poor, or otherwise were not famous? Would it not make more sense to analyze and study those who failed so you don’t repeat their mistakes?
In this episode, we discuss why you need to understand survivorship bias so that you can make decisions based on all the facts and not just one side of any equation.
