Probabilistic Thinking

Probabilistic Thinking and the Gambler’s Fallacy

This article explains why probabilistic thinking can cause a mental trap that can prevent people from making the changes they need to make in life.

This article on Probabilistic thinking is taken straight from our Foundation Course, for more information about our Courses follow this link.

By now I’d hope that you are beginning to accept that how we see the world, and a lot of how we think is influenced by our cognitive biases. 

Most of what we do day in day out is automatic, because we’ve done those things thousands of times before. We are creatures of habit and we often spend huge chunks of our lives running on autopilot, doing the same things and getting the same results.

In a moment I’m going to tell you about probabilistic thinking which is quite a complicated concept but I thought it’s better to put it here in this course at this stage of your journey than a little further on in another one of our courses because it’s really important to underline at this stage just how much probabilistic thinking can cause you problems by preventing you from making the changes you need to make in your life.. 

We spend most of our life doing what we have always done, relying on habits, doing what feels right, and relying on instinctual behaviour to handle situations. I see some people where patterns in their lives seem to repeat themselves time and again, they go from one bad situation to the next and either these people are really unlucky or they are somehow influencing these bad things to happen, and this gets us onto the concept of probabilistic thinking.  

Perhaps the easiest way to discuss probabilistic thinking is to use the Gambler’s Fallacy to explain the concept with the example of a roulette wheel. Years ago I remember watched a roulette wheel in a casino and the ball landed on black 8 times in a row. During this run of blacks there were people literally throwing money on the table, their reasoning being a false assumption that due to the amount of times it had landed on black the ball was more likely to land on red with the next spin. This false assumption is known as the Gambler’s fallacy; the mistaken belief that if something happens more frequently than normal during a given period, it will then happen less frequently in the future (or vice versa).

This is probabilistic thinking, the past doesn’t always predict the future, in this case it’s still roughly 50/50 (or to be more precise 48.65% if it is a European roulette wheel with only a single green zero that the next run of the roulette wheel the ball will land on red or black. What happens in the spin before in no way predicts the next spin of the wheel and the roll of the ball.  

The most famous example of the Gambler’s Fallacy was in a Casino in Monte Carlo on the 18th of August 1913. Here a ball was said to have fallen on black 26 times in a row, as you’d expect millions of Francs were lost as people gambled away their money falling victim to the Gambler’s fallacy and to probabilistic thinking. 

If something happens a lot it doesn’t mean that it is less likely to happen agin in the future. Reach into your pocket and toss a coin, it’s 50/50 heads or tails, it’s always going to be 50/50 because the last throw in no way influences the next. 

So what’s the Gambler’s Fallacy and probabilistic thinking got to do with me I hear you say, life I’ll give you is certainly a bit more complicated than a roulette wheel but the basic principles still apply. Your life isn’t going to change unless you change, and however Bad was the stuff you have gone through in the past, it doesn’t mean that now your life is any more likely to get any better in the future that is unless you start stacking the odds in your favour by doing something about it.

People often say to me that they think their luck must be changing soon, or that they are due some better luck in their life. There’s a famous quote that ‘the only cure for hard luck is hard work’, and there’s many other quotes with the same message, my favourite is the golfer Gary Player’s quote of ‘the harder I practice the luckier I get’.  

Probabilistic thinking means that if your life is really crap for a really long time it doesn’t mean that statistically it’s likely to get any better soon. Yet the good thing is the past does not dictate the future either, a different result in your life is no more likely or less likely because of how long you have spent feeling bad, or stuck in a bad situation. 

Things only change when you change the odds and to do this you may really have to change the way you play the game, but the game of life isn’t going to change unless you do. Do the same thing, repeat the same patterns and you’ll probably get the same results, because things really only change for a reason.

Probabilistic thinking is taken from one of the lessons in our Foundation Course, for more information about our Courses follow this link.

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