Sometimes I will be in traffic, just listening to a podcast and minding my own business. Then someone zooms past me, going at least 10km over the speed limit. Often this is also accompanied by changing lanes with no turn signal (or apparent reason). Sure, it frustrates me. But lately it’s also gotten me thinking about risk.
What’s going on in the head of someone who does this? They are risking a car crash in order to shave seconds or minutes at best off their arrival time. In essence, they are making a bet. They are betting their safety (and that of other drivers) for the chance to win a couple of seconds.
Doesn’t seem like a bet I would take. I’d prefer to live to drive another day, thank you very much.
Proposition
The idea and perspective change is to consider every option as a bet. You are risking something in the hopes of getting something and there is a probability of either outcome happening.
So there are 3 main components at play here:
What are you hoping to win?
What are you risking?
What are the odds of either outcome?
And then putting all of those together.
What’s the prize?
There’s always something that we are hoping to win when we make a decision.
It may be money when we make an investment, seconds off our drive time when deciding to go over the speed limit or just feeling good when that new person we just met might turn out to be friend material.
This is usually the easiest part. We always do something with a goal in mind, our actions are driven by ends. But it’s still good to take a moment to actually look at what we are hoping to win and verbalise it.
What’s at stake?
Although human beings are hardwired to fear failure, we don’t often do it in a very rational manner. All the more reason to bring our implicit thinking into the light.
With an investment, we are putting our money on the line. With a dangerous driving maneuver, we are risking our car or possibly health. When deciding to give someone new a chance, we are opening ourselves up to another person, which is always a bit scary.
Often it’s not a price we pay beforehand, but something that happens when things don’t go the way we would like. A risk.
And even if it’s none of those, there’s almost always an amount of our precious time that we are considering giving away. Either way, there is a flip side to the coin, big or small.
What are the odds?
This is where things get really tricky. It’s easy to know the probability of something happening when there are perfect conditions and the same scenario or experiment has happened many times in the past. But life, as we know, never has perfect conditions and there are always new challenges coming our way that we have never faced before.
The more we do something, the more we get a feel for it. All the little factors that come into play to shape the possible outcome. The more times we run our little experiments, the more information we get. If we want to get better at knowing the odds, we need to put in more repetitions.
If we can’t put in more reps, we can always ask around. Perhaps we have friends or acquaintance who have done something similar before. Someone on the internet definitely has.
And if we are totally in the dark… Well, we can always just take a shot and hope for the best. At least we already know what’s the prize and what’s at stake.
Putting it all together feat. parking
If we put all the previous pieces together, we get a bet. We risk A, in the hopes of getting B, which has a probability of X.
Now we have to weigh the risk, the reward and the odds.
I find it easier to do in two phases.
First, comparing the risk and the reward.
Second, trying to determine the odds of either scenario.
Often even the first step can be enlightening. To continue with the driving example, we are comparing winning a few seconds and crashing our car. In this example, that comparison alone gives me pause enough not to consider this specific bet. Because even if the risk is low, the stakes are high enough not to do it.
But to continue on, let’s take another car-relate example. Parking.
The way things work in my hometown is that one can park their car for 15 minutes in any town-owned legal parking spot. After that, if you don’t start paying, you might get a fine of about 30€.
So let’s say we know whatever we are doing will take more than 15 minutes. Perhaps an hour. When considering leaving our car in the spot and not paying for it, we are comparing a win of not having to pay for parking, which would amount to about 8€ in this example, with the risk of getting a fine.
Now the odds come into play. What are the chances of someone walking past the car within the 45 minutes our free parking has ended?
Well, that would depend on the area. I know some areas where there are numerous parking attendants walking around every day. Other areas, which are more distant from the city centre, might see one attendant during a 24 hour period. Maybe less. For this example, let’s say I’m in a central area in the morning with a high chance of someone walking by. I’ll put the odds of a fine happening at 33.3%.
Now that we have a feel for the odds, we can specify what we are betting on.
We are risking a parking ticket of 30€ in the hopes of parking for free for 45 minutes and saving 8€, which has the probability of about 66.6% of succeeding.
Now any gambler would say not to take those odds. But its quite close. If I felt the odds of getting away with it were higher, let’s say 80%, it would be a reasonable bet. Not that I am suggesting anyone break any laws here.
To give a counter-example, I have had to park my car overnight in the same area. The risk of getting parking ticket is very high for an overnight stay. I’d say 95%. And the fine is 30€. But here’s the catch. The parking would cost 120€. So in this case it’s a no-brainer to take the 95% risk. (And still not suggesting anyone should go around breaking any laws. Just pointing out the results of one action or another here.)
To Conclude
Thinking in bets has helped me put even smaller choices into perspective. Is the reward really worth the risk? Or perhaps I’m not actually risking that much? How sure can I be of the odds? Many choices become much clearer when thought of this way. Not a nebulous unknown looming over me, but a bet. With a reward, a risk and some odds.
Perhaps the biggest impact it’s had for me is when considering low probability events that have big risks. Sure, it might be a 0.01% chance, but if I’m risking ruin, be it vehicular, financial or health-related, it’s just not worth it. My car, my life savings and most importantly: my life, are rarely worth risking.
The goal, after all, is to stay in the game for as long as possible. To drive another day, thank you very much.