Probabilistic v. Linear Thinking

I first learned the concept of probabilistic thinking versus linear thinking from Jim O’Shaughnessy. The majority of us are linear thinkers. If you’re already a probabilistic thinker, then don’t bother reading the rest of this post. If not, read on. I came across an analogy that is a perfect representation of the concept.

The example is from Dan Rasmussen when he was a guest on the Invest Like the Best podcast; and it goes like this:

Jenny has studied English Literature at Amherst, wears glasses, and loves reading Trollop’s novels. Is she a librarian or a nurse?

For most of us, our first instinct is to linearly cue in on the face value of the information. It sure sounds like a librarian. However, there are about 999 nurses in the country for every librarian. Nurses can study English Lit, wear glasses, and love Trollop too. A probabilistic thinker would tell you Jenny is more likely to be a nurse, given the base rate.