![]() ![]() However, individually, they may do well one year or another and thus have the appearance of shrewd financial insight. The majority of mutual funds do not deliver returns better than the market, after deducting fees.The statistical explanation is that intelligent women are a minority of women (by definition of the bell curve), and so when an intelligent woman marries a man, the man is simply statistically more likely to be less intelligent than the woman. The reasons given are that smart men are threatened by intelligence, or that smart women want to be dominant. In dating, there is an idea that intelligent women tend to marry men who are less intelligent than they are.In reality, this could simply be because the athlete had had an outlier year (which got them the attention to get on the cover) and has now regressed toward the mean. This is explained as the athlete buckling under the pressure of being put under the spotlight. Athletes on the cover of Sports Illustrated seem to do much worse after being featured.However, patients attribute the healing to whatever action they took meanwhile – seeing a doctor, doing a superstitious act, taking medicine – while ignoring that they likely would have returned to full health without any action. Many health problems tend to resolve on their own, given our bodies’ natural healing properties.In the Small Numbers example above, if the Gates Foundation had measured the schools again in subsequent years, they’d find the top-performing small schools would have lost their top rankings.From this experience, he “learns” that praise weakens performance and berating increases performance. The next time, the two units return with the opposite results. He praises the first and berates the second. A military commander has two units return, one with 20% casualties and another with 50% casualties.Here are examples of regression toward the mean: ![]() We come up with cute causal explanations for why the high performers faltered, and why the strugglers improved. However, we tend to see patterns where there are none. In reality, regression toward the mean is just statistical fluctuation. ![]() We’ll cover what it means to regress toward the mean in psychology, 7 examples of regression toward the mean, and how to counter biases related to this phenomenon. High performers show disappointing results when they fail to continue delivering strugglers show sudden improvement. Regression toward the mean refers to the principle that, over repeated sampling periods, outliers tend to revert to the mean. What does “regression toward the mean” mean in psychology? How does it apply to everyday life? Like this article? Sign up for a free trial here. Shortform has the world's best summaries of books you should be reading. This article is an excerpt from the Shortform summary of "Thinking, Fast and Slow" by Daniel Kahneman. ![]()
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