Everybody Is in the Top 1%
I was mailed this link just today by a friend along with this note:
"The most telling polling result from the 2000 election was from a Time magazine survey that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans say they are in the richest 1 percent and a further 20 percent expect to be someday."
I guess this only further proves Travis's theory: people can't do math.
The article is an Op-Ed piece that was published in January. I had been citing those same statistics and ideas in conversation for some time (probably to the same friend that just sent the link today, amongst others). And this is the exact article where I got them!
Don't let that take away from the power of the idea. If the statistics accurately reflect the way that people think, then that explains so much! People's misperception of probability can explain why so many people voted against their own best-interest (an economists nightmare) in voting for Bush the tax-cutter-for-the-wealthy.
Misunderstanding of probability can also explain why so many people play the lottery.
And from an entirely different direction, I concluded that many people don't deal well with probability when judging the acceptability of risk in their lives: An Acceptable Risk. I could probably give many more examples along similar lines.
So, I'm now working with the generalization that many people, even very intelligent people, make irrational decisions as a result of their misunderstanding of probability. This is important. It's not like Calculus: something that very few people need to do in real life. Some of life's most critical decisions depend upon it.
Given that hypothesis, the classic Birthday Problem is a fun demonstration of how intuition can be so wrong, or at least it is no help at all. The problem asks, "how many people need to be in a room for there to be better than a 50% chance that two of them have the same birthday?" Many people will give very logical and understandable, but incorrect, answers. I didn't get it when I first heard it in a probability class in college.
Now we may have an explanation, but what to do about it? (besides playing parlor games)