Wednesday, May 16, 2012

Risk Intelligence: Get better at seeing the future without the two Strawberry Nirvanas

Here's a well-known fact:  It's against human nature to be very good at guessing what's going to happen, whether in the realm of world events, stock prices, personal relationships, or the reliability of your work (read: how good your code is).  As a recent Wall Street Journal article on risk intelligence pointed out:
"Most of us, for example, tend to vastly overestimate our chances of winning the lottery, while similarly underestimating the chances that we will get divorced."
The good new is that apparently we can improve our risk intelligence with practice.  Many professional gamblers keep meticulous notes of how successful they were so they can analyze their methods and adjust accordingly.  Likewise, by going through the exercise of estimating on a weekly basis what we think the likelihood is for any set of events, assigning a percentage or other numerical value to our estimate, and then reviewing how good we did, "we can go a long way toward correcting for our most common errors."

Sounds like there's something I'll be adding to my weekly planner.  Because even though the boost is free, the cost of the smoothie it comes with does add up.



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