Are My Glasses Too Rose Colored?...

It’s January and time for the traditional start-of-the-year predictions. Well, not this time. We have learned painfully over the years how confusing this world is and how predictions are often more about hope than reality.

So this time we are going to look backwards and, surprisingly, learn some really important things. Nicholas Kristof in his column in The New York Times on Sunday, January 6th notes that “2018 was actually the best year in human history.” This will surprise many. There were fewer wars, global health improved again and people are eating more and better food than ever. A half century ago more than half the world’s population lived on less than $2 a day. By the 1980s this was down to 44% and today only 10% live in extreme poverty.

We talk a lot about behavioral economics here, the fact that we are not as rational as we like to think. We take shortcuts in our thinking which often gets us in trouble. We suffer from “availability bias,” the fact that we overestimate the frequency of events based on how often and how recently we have read about them. Even though we say we want to hear more good news than bad, we relish reading about murders and storms. Popular media plays to this, or as they say in the newspaper business, “if it bleeds, it leads.” So we think that the overall crime rate is high and going higher because crime is what we read about. But violent crime actually has been coming down (see chart below).

Crime pg 1.jpg

The world is uncertain today and bad things do indeed happen to good people, but as we start off a New Year, remember that the world is in many respects a much better place than in the past. We remember ‘the good old days’ as if there was nothing bad about them. But many things (health, diet, education) have improved since the ‘good old days.’ We say to ourselves, the world did improve in the past, but this won’t be the case in the future. Why? Because we are at a ‘critical point’ in history and improvement will be just too difficult. But when you look back, every period, at the time, seemed ‘critical.’ Andy Grove at Intel liked to say, “only the paranoid survive.” Stay concerned today (okay, maybe even a bit paranoid), but remember, we live in remarkably good times. And they will most likely get (ugh, a prediction!) even better.