Beating Fear with Math (pt 1)

Something is about to happen. I feel afraid of what might happen. My fear narrows my attention to ONLY a tiny subset of all outcomes – only those I can live with – maybe only one. My fear has decreased the odds of an acceptable outcome and increased the odds of an unacceptable outcome. Why? Is my fear that powerful that it can change outcomes? Maybe. Or maybe it’s just a simple bit of sets math.

Mathematics of Fear

Before something happens, all that can possibly happen make up the “all-outcomes” set. Once something happens, all possible happenings collapse into one happening – the “selection” set of happenings. Within all outcomes is THE outcome – that is, the selection set is part of the all-outcomes set. Once I select something, the section set becomes the all-outcomes set. Once something happens, it is all that could happen.

Think of it like the lottery in which only one series of numbers will result in a cash payout to ONE lucky winner. At the start of the lottery game all tickets have equal odds of winning – the winning ticket is in the all-outcomes set. The winning ticket is also in the selection set – the set of tickets that makes up those that will get selected as the winner.

The instant the winning ticket is announced, the all-outcomes set collapses into the selection set and millions of “unlucky losers” realize they didn’t win the big prize while one lucky winner realizes a fortune.

Winners and Losers

In a lottery, the odds hugely favor losing. That’s because of the outcome-narrowing effect imposed on the all-outcomes set by a small selection set. The smaller the selection set, the greater the prize for winning – at incredible odds – and the greater the motivation to play regardless of the odds. The larger the selection set, the greater the odds of winning – though a smaller prize – and less motivation to play. Like the difference between playing the lottery and investing in a savings bond.

A few years ago, a group of people figured out a way to “game the system.” They bought ALL but a tiny fraction of the tickets in a State lottery. They realized a significant return on their investment when one of those tickets won the jackpot. They shared the pot with all investors in the scheme. They’d flipped the odds into their favor by grossly expanding the selection set to nearly the size of the all-outcomes set. They’d turned a gamble into an investment in which many people realized a smaller win while fewer people realized a smaller loss.

How might I apply this concept to beating my fears? That’s the subject of our next article.