Observational Selection Effect

Observational selection occurs when we draw conclusions from the part of the picture we can see while overlooking what is missing. Nassim Taleb’s “Black Swan” uses a story attributed to Cicero. The Greek philosopher Diago, nicknamed the Atheist, was shown images of people who had prayed and survived a shipwreck. The implication was that prayer had saved them. Diago asked: “Where are the images of those who prayed, but still drowned?” The dead cannot provide matching testimonials. Looking only at the survivors hides evidence needed to assess the claim.

The excerpt calls another Taleb work "Fooled by Accident"; the reference list identifies it as Fooled by Randomness. Its discussion challenges the idea that success comes entirely from personal qualities and talent, overlooking chance and "hidden witnesses." Consider a group whose wealth comes from secretly playing Russian roulette. They spin the cylinder of a six-shot revolver containing one cartridge, pull the trigger, and receive money if they survive. About 1/6 of the group is eliminated each round. After several rounds, a small wealthy group remains, alongside a large cemetery. Can the “success” of the survivors be attributed to their talent?

Outsiders see the wealth but may not see the process that produced it or the risks taken. As the excerpt puts it, “no one is watching the bulletproof drum of reality. The naked eye very rarely sees a wealth generator. We observe the values produced, but never the processor (and this makes people lose sight of their risks) and never see the losers. The game seems awfully simple, and we blithely play it further.”