You Can't Assess Risk.
And it's killing you.
Annie Duke won $4,270,548 playing poker.
Her advice is worth more than that.
In 2018, Duke released her most popular book, “Thinking in Bets.”
In “Thinking in Bets,” Duke suggests we should frame our decisions as bets. Consider the costs of being wrong, and weigh them against the benefits of being right.
What are the odds this will work?
What will I stand to gain?
What will I stand to lose?
It’s great advice.
But there’s a problem.
We’re human.
Tying decision-making to statistical probabilities makes sense. If the numbers say to go for it, go for it. If the numbers say to back off, back off.
But playing life purely by probabilities is impossible when your motherboard is actually a series of traits, beliefs, flaws, strengths, neurosis, and biases you inherited from your mother.
Said another way:
Computers can stick to probabilities because they operate without emotion.
We can’t.
And that creates one of the saddest truths that holds true across time, geography, and every variable you can think of:
99% of people overestimate the risk of failure.
99% of people underestimate the cost of doing nothing.
Just gonna prove that real quick.
Starting a business
"I don't have enough experience to start my own thing."
Real risk of failure:
Stats show 20% of businesses fail in year one. That means 80% make it.
Even if you “fail,” you just added a bunch of experience most people never get.
Real cost of doing nothing:
Spending 40+ years building someone else's dream. A life of “What if?” Dying with your best ideas still inside you.
Getting in shape
"It’s too late to start. I’m so far behind."
Real risk of failure:
Zero. You can't “fail” at fitness unless you quit.*
(*Pay no attention to my slipped disc.)
Real cost of doing nothing:
Shorter lifespan. Chronic disease. Watching your kids grow up from the sidelines because you can't keep up.
Investing
"The market is too volatile. I'll wait until things settle down."
Real risk of failure:
The S&P 500 has provided positive returns 73% of the time over 1-year periods. 84% over 3-year. 88% over 5-year. 94% over 10-year.
Real cost of doing nothing:
Inflation devouring your dollar. Working years longer than necessary. Always waiting for the “perfect time” and never finding it.
Pursuing a passion
"What if it doesn’t work out?"
Real risk of failure:
Some wasted time. You might think people will judge you for failing, but trust me — they don’t care. And if they do care, they care because they’re impressed you gave it a shot.
Real cost of doing nothing:
Never knowing what could have been.
Career advancement
"I should wait until I'm more qualified."
Real risk of failure:
A bruised ego. Maybe a few awkward moments in meetings. Having to update your LinkedIn*
Real cost of doing nothing:
Getting passed over for promotions. Watching less qualified people leap ahead. Stagnating while your skills become obsolete.
Name a goal you have.
No matter what it is, I guarantee you’re overestimating the risk and underestimating the cost of doing nothing.
So back to Annie Duke.
Maybe we can’t robotically assess the risk of failure. Maybe we can’t calculate the exact cost of inaction.
But we can at least understand this:
If you don’t take action, the probability you’ll fail is 100%.
And any probability of success is more attractive than that.
You miss 100% of the shots you don't take
-Wayne Gretzky's dad