If the risk of an event goes up or down, we assume that it will keep changing in that direction. Consider a weather forecast: If the probability of rain goes from 20% to 30%, many people then think it will rain, even there’s still a 70% likelihood that it will stay dry.
"We have a tendency to perceive momentum—if things have gone up, we assume the trend will continue," University of Toronto marketing researcher Sam Maglio explains in a press release about a new study.
Humans are terrible at understanding probability. The classic example is the coin-flip. If a tossed coin comes up tails 10 times in a row, most people will expect it to come up heads on the next flip. The reality, as we know if we think it through, is that the chance of either heads or tails is the same 50/50.
Maglio studied participants’ expectations in 10 tests, involving topics like weather, climate change, sex, sports, and wine quality. In one study, participants at a farmers market were asked to choose between two bottles of wine, one for $15 and one for $40. They were told that the more expensive wine had a chance of being corked (off-tasting and undrinkable), whereas the the cheap wine was just fine. Then they revised the probability of the $40 wine being contaminated. In some cases they changed the probability down from 20% to 15%. In the rest, they increased it from 10% to 15%. When the participants made their choice, the probability was always 15%.
The result was that when the likelihood of the wine being off was revised upwards, 34% chose the more expensive wine. When it was revised downwards, 47% preferred the expensive wine. That is, people put more faith in an upward change than a downward one.
This tendency is one that could be exploited by politicians, marketers, or anyone else seeking to put a spin on a numerical trend. To sell a change, you should focus on the part that is growing. We see something similar already with static figures, where a snack that contains, say, 9% fat, is sold as being "91% fat-free."
As for improving our own success rate when it comes to interpreting probabilities, we should try to pay attention only to the current numbers, and not the way they change over time. Obviously that doesn’t work for everything, but it works for coin-tosses and weather forecasts, which isn’t a bad start.
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