Here is an article you should read and think about: “The Surprisingly Solid Mathematical Case of the Tin Foil Hat Gun Prepper”. The author is a stormwater hydrologist—what he does for a living is study the behaviour of water as it moves through the Earth’s ecosystem and, in particular, extreme events such as floods. It is he and his colleagues who draw the red lines on maps which determine whether you can get flood insurance at an affordable price and, in many cases, obtain a long-term mortgage on a property. Those in his profession think deeply about “tail risks”: events which occur rarely but which have major, or even catastrophic, consequences when they happen. Humans have evolved in an environment which has selected them to apply a number of heuristics that, in most cases, get a good enough answer without a complete understanding of the problem or an exhaustive analysis of the situation. But evolution, biological or cultural, is poor at selecting for heuristics which apply for events which happen less frequently than the lifetime of most members of a species. We use our intuition, and often we get the wrong answer.
There is some math in the cited paper, and in what follows, but nothing more complicated than multiplying numbers, which you can do with a calculator if you wish to work it out for yourself. The only other thing you need to know are some very basic facts of probability and statistics: I’ve written an “Introduction to Probability and Statistics” which, while aimed at other applications, may help if you’re rusty and want to review the details. All you really need to know is that if a series of events are independent of one another (the outcome of one doesn’t affect the others), and that they have a given individual probability, you get the probability of a series of events occurring one after another by multiplying their probabilities together.... [Read More]