The brain and betting: Survivorship bias is a mental mistake that could lead to costly errors, such as trusting the wrong sports betting “expert”.
According to Wikipedia, survivorship bias (or survival bias) is “the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility.”
This could lead to costly mistakes whether you are making financial decisions, sports betting or riding a bicycle.
Ehrmm, a bicycle? More on this later in the article!
Survivorship bias could lead to false conclusions
As mentioned in the previous “The brain and betting” articles, the human mind has its flaws. The brain is wired in a way that could hinder our ability to make rational decisions. It means well, the poor brain, but patterns born out of millions of years of evolution might not fit the modern world.
Survivorship bias is believing that the truth comes from people who survived and/or succeeded while ignoring all other data, such as the insights from those who failed/died, research and luck.
The extremely rich founder example
The US company HubSpot has a nice example of survivorship bias:
“Steve Jobs, Bill Gates, and Mark Zuckerberg dropped out of college and became millionaires, and so will I.”
The incredible success of Steve Jobs, Bill Gates and Mark Zuckerberg is credited to their commitment, innovation and hard work, not their education. And this might be true. The problem is that for every Gates, Jobs or Zuckerberg there are thousands or millions of people who have worked just as hard with just as great ideas and still not been successful.
Research shows that most successful people have graduated college (94% according to HubSpot). Using Gates, Jobs and Zuckerberg to prove a point about quitting school and working hard is the wrong conclusion and one that could have a huge negative impact on a person’s life.
HubSpot also explores the popular habit of reading the biographies of such successful people to become more like them. While these books could certainly be inspiring and contain some pearls of wisdom, they hardly contain the full story as there’s just too much data to include. Billions of factors have weighed in to create a Zuckerberg or a Gates and many of them are down to chance.
History is usually written by the winners.
The bicycle example
As for riding a bicycle? Only 20-30 years ago it was almost unheard of to use a bicycle helmet. Some “adults” today will still laugh at the notion of using bicycle helmets (as many people were furious at the idea of using seat belts in cars).
Why? Because “Neither I or any of my friends used bicycle helmets, and we turned out great”.
This classic explanation illustrates the essence of survivorship bias and the literal meaning of the concept. Yes, it’s true that they survived without their helmets, but that does not mean it’s safer to ride a bicycle without a helmet.
The fishing example
Let’s say you go fishing in a lake. You move around until you catch a fish.
Hooray! You finally found the spot, and especially if you catch a second and even a third fish you might cherish that fishing spot for the rest of your life, eventually letting your children and grandchildren in on your precious secret.
What you didn’t know is that you were just lucky that first time – and that you have spent your entire life at the worst area for catching fish in that whole lake.
OK, enough with the examples. You probably get it. Survivorship bias is a tendency to trust information and a “result” even though it was completely random. It’s our habit of focusing on successful examples and ignoring the failures, creating a false reality.
Survivorship bias and sports betting
In general, survivorship bias is something to consider when considering sports betting tipsters and statistical betting models. Be critical also of yourself – even though a strategy has worked for you in the past. Was it a fact or just luck?
The pro sports betting tipster / expert crowd
A typical figure when discussing profitable sports bettors is that only about 2% are making a profit. Some other studies have concluded with a slightly higher percentage, but we have to conclude that it is very difficult to bet profitably.
Even so, if you let 1.000 monkeys pick 10 bets at random, a significant percentage of them would do so profitably (we’ll skip the mathematics in this article, but let’s assume that the bookmaker’s margin is a low 2% and that the bets are even odds (2.00)).
With 20 bets, still quite a few would be in profit. Even so with a 100 bets. Even after 1.000 bets many of the monkeys would be in profit. Applying the logic from a Pinnacle Sports article on the subject; about 250 monkeys would be in profit after 1.000 wagers.
Are these monkeys great sports bettors? No, they prefer eating bananas and fondling each other’s private parts. They don’t have a clue about sports or betting. Should they be trusted? Of course not! It’s pure luck, and eventually it will run out. And remember, 750 of the monkeys lost money.
Tipsters are usually not monkeys and monkeys are usually not tipsters, but this example shows that a huge portion of sports betting tipsters will show a profitable betting history even if they’re not very good and you will lose money on them in the future.
As for the survivorship bias, the “bad” tipsters are hidden away from tipster web sites and social media networks, they quit or re-launch under a different name.
The winners get all the attention – even if they’ve just been lucky and are actually worse bettors than the ones hidden away.
When looking at sports betting tipsters, look at their commitment, methodology, strategy and skill; not just their bet history. Be very skeptical of tipsters charging money, and especially the ones who want you to sign up for a long period of time.
When looking at data
A form of survivorship bias often occurs when looking at historical sports betting data. If you look closely at five years worth of detailed Premier League football statistics with betting odds, you will find lots of possible betting models. Most of them would not be profitable, but some would be.
“If I had bet the draw in all matches with home teams placed #8 to #12 and away teams places #13 to #16 in the league table I would have made $1.589 from 89 $100 bets.” (Fictional example.)
This could lead to you thinking that this strategy would be profitable also in the future, and that it is better than the many unprofitable ones. And yes, it was in the past. In the future however; that remains to be seen. Just as with the tipsters.
The “successful bettor” article in your local newspaper
From time to time, a sports betting company will persuade a newspaper to run an article on a gambler that staked $10 and won $100.000 on a ten-fold football accumulator.
The bookmaker will hope to inspire their customers to make lots of these bets by telling the story of their one winning customer and “hiding” the fact that such bets in general are profitable only for the bookmaker. Survivorship bias.
A final thought
A thorough knowledge of probability, statistics and psychology is an advantage when trying to make a living from sports betting, whether you submit bet slips or are a bookmaker.
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