Survivor Bias on the Gridiron - Freakonomics Blog - NYTimes.com:
"Over time, therefore, the DJIA reflects a different reality than many people presume. It is biased toward survivors — or, if you want to think of the concept more broadly, toward winners.Two fast examples/quotes I will add:
This winner’s bias, if you will, shows up in pretty much every realm imaginable: academics, medicine, politics, etc. I don’t mean to sprinkle skepticism all over your inherently positive thoughts about the world, but I do think it’s worth keeping winner’s bias in mind whenever you read (or write) something about the performance of a given group or institution or coalition."
"Winner’s bias is perhaps especially pronounced in sport. The behaviors of winners are remembered and dissected far more thoroughly than those of losers, and given greater weight, even if the outcome was decided by a tiny margin."
1. "History is written by the victors" (probably Winston Churchill but many attributed)
2. "No one remembers who came in second" (no idea)
We must not only look at the winners. There is much to be learned by looking at the losers as well.
Class: be able to explain how the survivorship bias influences allocation decisions as well as academic studies.