What is Base rate neglect In Behavioral Economics?

What is Base rate neglect?

Base rate neglect is the tendency to ignore the overall frequency of an event (the base rate) when judging the probability of a specific case. People focus on vivid, case-specific information and underweight the statistical background.

How it works

In Kahneman and Tversky’s famous lawyer-engineer problem, participants read personality descriptions and judged whether each person was a lawyer or an engineer. Their judgments were almost entirely driven by the description’s fit with stereotypes and barely influenced by being told that the pool was 70% lawyers or 70% engineers.

Applied example

After a positive result on a medical screening test with a 5% false positive rate, a patient may assume they almost certainly have the disease. But if the disease affects only 1 in 1,000 people, the odds of actually having it are still only about 2%, because the base rate of the disease is so low.

Why it matters

Base rate neglect is a critical concept in medical diagnosis, criminal justice (where jurors overweight forensic evidence relative to prior probabilities), and any domain where case-specific information competes with statistical baselines.

Sources and further reading

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