The Power of Misconceptions

In broad terms, we are all mostly ignorant. Worse than ignorant, we have notions and views, firmly held, that are entirely incorrect.

We only complain about what we don’t like

Nobody complains to their boss that they are overpaid. Nobody complains that their pension or social security increases were above inflation last year.

We don’t understand the size of countries and continents

Africa is huge. More of an issue for Europeans and Americans, but the problematic views of the size of Africa due to mapping “projections” used to represent an almost-sphere onto a flat map are almost universally held.

A map showing the real size of Africa as measured in square meters of surface area compared to other countries
The Real Size of Africa

We don’t understand our economy (or at least US students surveyed don’t understand their economy)

Bill Goffe surveyed his students

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with worrying results:

  1. Students assumed 35% of workers earn minimum wage compared to the 2007 actual statistic of 2.7%
  2. Students thought recent US inflation was around 11%, when the real answer is basically 0. (and google is apparently planning some sort of price index of their own)

Plenty more where those came from.

Then a few previous posts of mine highlighting these problems

Estimating the ERP is hard, but the range of common flaws is astounding.

We like to complain about electricity prices, when we haven’t figured out that we pay for it all anyway.

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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