Base Rates and Celebrations
Graduations are always celebrated, but I never felt like I accomplished all that much when I graduated high school or college. As long as you didn’t do something stupid, graduating was inevitable.
Base rates is a concept used in investing to describe expected outcomes in terms of historical outcomes. For example, if 75% of restaurants in Manhattan fail in the first year, you shouldn’t expect your new restaurant to be a sure thing.
If you’re not outperforming the base rate, should you celebrate?
Another way to think about it is the placebo effect. An experiment needs to outperform the placebo in order to be considered effective.
This all sort of implies that celebrations depend (solely) on exceeding base rates of success, which is kind of a cold, numeric way of looking at celebrations.
In terms of: "As long as you didn’t do something stupid, graduating was inevitable."
"As long as you didn't do something stupid..." is a vague qualifier that can apply to almost anything.
* "As long as you don't do something stupid, you can bowl a perfect game."
* "As long as you don't do something stupid, you can hit 40 home runs in one season."
* "As long as you don't do something stupid, your Manhattan restaurant will survive beyond its first birthday."
"As long as you didn't do something stupid..." is an easy way to brush off individual circumstances as irrelevant even when they aren't. I'm aware of the base rate fallacy. But the base rate just isn't relevant if individual factors significantly alter the probability of success for an individual.
Prof Clayton Christensen talks in his book, Disrupting Class, about how the modern American education system is a failure for many students. It's not because students are stupid, but because it may not work well with a specific student's strengths and weaknesses. So, graduating is not really inevitable even if a specific student doesn't do something stupid.
Individual circumstances matter because base rates are often non-ergodic. Base rates (like how 75% of restaurants in Manhattan fail in the first year) are ensemble averages. But the time average for an individual can be different. Even if a person's first restaurant fails, subsequent restaurants may have better chances of success if the owner isn't financially ruined and learns from past failures. There's path dependence.
I would say a graduation can *feel* unimportant if it *felt* inevitable. But that doesn't mean it *was* inevitable. Here's a reframe...
A lot of things seem inevitable when we take life for granted. There's a reason people celebrate birthdays, bar mitzvahs, and holidays. They might also seem inevitable. On the surface. But a celebration can be a designated opportunity to reflect on a journey so far and an opportunity to prepare for a new phase of life. Because completing a phase of life is never entirely inevitable. Shit happens. And that's the problem I have with solely basing celebrations on exceeding base rates.
A base rate is about an ensemble. But a personal celebration is about an individual.
Base rates use ensemble averages that conceal the details of an individual person's journey. A journey of overcoming obstacles and attaining unique life experiences to reach a milestone a person may never have reached before (and may never reach again) - why is that not worth celebrating?