Consider a low probability yet disastrous event, which has a 1% probability of happening.
How does that risk feel?
One thing this feeling depends on is the source of the information.
A. Description by an expert: Say an expert is telling us about this risk. When we hear it, we would understand that the chances are slim, but still possible. This possibility can lead to a slowly growing worry. In fact, the more disastrous the event, the easier it would be to focus on that small possibility, identify with it, and start feeling increasingly more anxious.
B. Lesson from experience: On the other hand, if we’re evaluating the situation based on experience, things would be different. Given the small probability, many would not have personally experienced that particular event. They would also be surrounded by others that share their positive experience.
As a result, experts’ warning would feel vague and irrelevant, while experience would feel vivid and reliable.
Decisions can suffer due to this expert-experience gap, especially in the face of disasters.
Experts can lose sleep over a highly transmissible virus, changes in climate, or the risks of doing business in a certain way. They can try to warn us accordingly, urging us to take preventive action before it’s too late.
Our experience, on the other hand, would do the opposite and leave us asleep at the wheel. In particular, the rarer the event, the less reliable would be one’s personal experience and the experience of those around them.
Managing the Gap
Does this mean that decision makers should solely and blindly trust the experts?
But we should acknowledge that experience is a teacher that is extremely difficult to deny, even when it teaches the wrong lessons and doesn’t accurately represent the dangers of the situation.
So, if the lessons of experience clash with what experts say about a certain potential disaster, this could be a trigger to look into the problem in more depth:
- Which experts are saying what?
- What’s the data they are relying on?
- Are there any underlying variables that are increasing exponentially?
- What are some of the potential consequences of ignoring these variables and the expert advice based on them?
- Are there any experts, who offer certain solutions that might be viable?
Managing the expert-experience gap is a major duty of a manager, who wishes to appropriately prioritize decisions, mitigate risks, and prevent disasters. This is not an easy task. Beyond leadership and decision making skills, it also requires certain technical knowledge that provides a decent level of statistical literacy.