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Choiceology: Episode 5


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News reports sometimes make it seem as if danger lurks around every corner. And while there’s no doubt that risk is a part of life, do we worry more than we should?

On this episode of Choiceology with Dan Heath, we examine a bias that affects the way you perceive both risk and reward. We trace how this bias may have helped your ancestors avoid lions lurking in the tall grass—but may also negatively affect your decisions around things like vacations and lotteries.

  • The episode begins with Ranie Pearce and her harrowing tale of adventure in the middle of the Pacific Ocean. Ranie Pearce is an accomplished open water swimmer and a member of the South End Rowing Club.
  • You’ll hear an experiment involving sharks—and something even more dangerous—at the Vancouver Aquarium in British Columbia.
  • And Dan Gardner explains the psychological roots of our common misperceptions about risk and reward. He is the author of Risk: The Science and Politics of Fear.

Choiceology is an original podcast from Charles Schwab.

If you enjoy the show, please leave a rating or review on Apple Podcasts.

Click to show the transcript

Dan Heath: I’m Dan Heath, and this is Choiceology

Newscaster: … The latest on Tuesday’s crash of Flight 137, officials have confirmed that …

Dan Heath: Have you ever noticed something in the news that makes you rethink your decisions? Maybe a couple of stories on plane crashes have you second-guessing your choice to fly to Hawaii for a holiday. Or Shark Week has you seriously re-considering that trip to the beach.

Narrator: Coming up next on Shark Week: great whites, the perfect killing machines.

Dan Heath: How do we assess what’s risky and what’s not? What kind of computations are going on in our heads? We’re going to examine one bias that disrupts those calculations and show how it affects your decisions: in day-to-day life, in your finances and out in the middle of the ocean.

This is Choiceology, an original podcast from Charles Schwab.

It’s a show that reveals the hidden psychological forces that influence the way you make decisions. Small ones and big ones.

And we don’t just reveal these forces. We give you tips on how to minimize their impact so you can avoid costly mistakes.

OK, let’s say you decided that flight to Hawaii was worth the risk for a much needed vacation. You arrive to white sandy beaches, a warm tropical breeze and waves lapping on the shore. The turquoise waters beckon you to go in for a swim.

There you are, enjoying the experience of floating effortlessly in the crystal clear water—but suddenly you become very aware of your fingers and toes. How vulnerable they are. And now those relaxing waves have become a churning ocean of dread.

Ranie Pearce: OK. My name is Ranie Pearce.

Dan Heath: Ranie is someone who spends a lot of time swimming in the ocean.

Ranie Pearce: I didn’t start swimming until I was about 45. I waited until after my children could drive themselves to their activities. Then I started going to a local swimming pool and training in the morning before work.

Dan Heath: She fell in love with swimming in the pool, but then she was introduced to open water swimming. She started with a couple of lake races.

Ranie Pearce: Then I wanted to do the Alcatraz Swim in San Francisco, so I did it with a friend. It was so much fun that I joined the club that put on the event, the South End Rowing Club. Five years later, I swam the English Channel.

Dan Heath: She was hooked.

Ranie Pearce: I swim in rivers, and lakes, and oceans, and seas. I’ve swum in holes that you cut in the ice, and I’ve tried to swim between continents. There’s something about being in the ocean. You’re so insignificant. It’s very transcendent. It’s special. It’s magical. It really is. You can’t believe how lucky you are to be there and to experience the power and the energy of the ocean.

Dan Heath: Ranie became so passionate, she started to check off the Ocean Seven, a list of seven iconic open water swims around the world. It’s the swimming equivalent to the Seven Summits mountain-climbing challenge we talked about in Episode 3.

Ranie Pearce: The first is the English Channel, then there’s the North Sea or the Irish Channel, the Straits of Gibraltar, the Catalina Channel in California …

Dan Heath: How many swimmers have completed the Ocean’s Seven? Six. Six people. That’s how difficult this is. The swims can be tackled in any order, but the same rules apply to all of them—swimmers can only wear a regular swimsuit, hat, goggles and earplugs.

Ranie Pearce: I thought it seemed like a good idea. I swam the Straits of Gibraltar, and all I can think of was, “Oh, that wasn’t very hard. I could do that, I could do more.” Then I swam the English Channel, which obviously was hard, but it wasn’t so hard that I didn’t imagine I could do it again.

Then I swam the Catalina Channel. Then I went out to Hawaii to try the Moloka’i Channel.

Dan Heath: The Molokai Channel in Hawaii runs between the west coast of Molokai Island and Oahu. The currents are very strong, and the water is very deep, about 2,300 feet at the deepest point.

Ranie Pearce: It’s very big. It’s really big. You are in the middle of the Pacific. There’s a couple of islands around you, but you miss one of those islands on the tide or the current, and you are nowhere, there’s nothing going to save you.

I was pretty excited about it. I had trained very hard for a long time. I was planning on a 20- to 24-hour swim, and I thought it was going to go well.

Dan Heath: Did you hear that? A 20+ hour swim! That’s longer than I can stay awake. And she’s swimming in the middle of the ocean. And we’re not talking about calm, placid waters.

Ranie Pearce: The whole time I was in Hawaii, the winds were just howling. And 30-mile an hour winds are not an easy place to swim. No matter what you’re doing or how warm the water is, it’s going to be hard.

But the day that I picked in the window that I booked was the best day of the seven days, and it was still not a good day. There were eight- to 10-foot waves, and it was hard work.

Dan Heath: The weather was rough, but Ranie was an experienced open water swimmer. She thought she could manage. And she had a support team she trusted to keep her safe.

Ranie Pearce: I had a boat captain, and he had a second captain, and then there were two kayakers, and they were going to take turns kayaking for me because you need a kayak right near the swimmer, and the boat is quite a bit further ahead of the swimmer keeping the course.

The role of the kayaker is so that the boat doesn’t lose the swimmer in the water. You wouldn’t believe how hard it is to see a little body in the water just swimming along in huge waves like that. They lose you in a minute—it’s very hard to keep an eye on the swimmer.

Dan Heath: It was Ranie’s kayaker who first spotted a slow-moving shape just under the surface of the water.

Ranie Pearce: I can’t remember the exact timing of it all, but I think the kayaker knew for about 20 minutes that we had a tiger shark circling and following us.

And he made me aware of it, and he asked me how I felt about it. I said, “Well, I can’t see him, and he’s not that close. I think I’ll just keep swimming, and I hope he goes away.”

Dan Heath: Tiger sharks are awesome predators, and they have voracious appetites. They can grow to 16 feet long and weigh up to 1,500 pounds. They use their sharp eyesight and even keener sense of smell to locate their prey.

Ranie Pearce: I had only been swimming for four and a half hours before the shark showed up, and I was already tired and throwing up, which is not a good way to start a 20-hour swim.

And then the kayaker saw a second tiger shark, and he started to circle around me as I was swimming. I had never experienced that before with a kayaker, so I was unnerved to say the least. And I thought, “I don’t know what he’s doing.” And so he got back around to where I could see him and talk to him.

I said, “What’s up?” And he said, “Well, now there’s two.” I said, “Oh.” He goes, “And they’re circling you.” And I didn’t feel very comfortable about that because everybody knows, even people who don’t know anything about sharks know that there’s a rhythm to how they attack.

Dan Heath: Tiger sharks circle their prey. Then they bump it. And then they bite.

Ranie Pearce: I had heard that all my life, you know, that tiger sharks bump before they bite. These two sharks were circling now. He said there were two, and one was bigger than his kayak, which was nine and a half feet long. So I was pretty scared.

Dean Heath: But Ranie Pearce was determined to keep swimming. She had spent thousands of dollars organizing the trip. She didn’t want to give up. But these two tiger sharks continued to slowly circle Ranie and her kayaker. And then …

Ranie Pearce: Then, one of the sharks swam directly under me, just like in a movie where you see the dead eyes and the hugeness of it. I felt the slip stream of his tail as he swam under me. I mean, he was that close.

I go under the water and I come back up, and as I’m coming up something hits me hard in the back of the head. I assume that it’s the kayak, but when I come up the kayaker’s right there and he says, “Did he bump you?” I looked at him and I said, “I thought it was you,” and the kayaker shakes his head, and I think, “Oh, [bleep]. I’m out of here.”

I just started to swim for the boat as fast as I could because that is their pattern: They circle, they bump, they bite, they circle, they bump, they bite.

I was very scared. I was very scared.

I think the thing that made it the most real for me, and I have to say I’m a large person, and the guy on the boat, one of the other people working on the boat, literally caught my arm mid-stroke and lifted me out of the water with herculean strength because he was so terrified. I didn’t even touch the boat. I was like levitated out of the water into the boat.

Dan Heath: Ranie survived, obviously, or she wouldn’t be here to tell us the tale. But what a terrifying experience she endured. And it’s vicariously scary for us, too. You may have felt a real sense of fear as you heard her story. And the question is: Should you trust that fear, or not?

Let me introduce you to someone who’s had a lifelong fear of sharks. Her name is Emelia.

Emelia: I can remember exactly. I was home sick from school, and I don’t know why, but my mother let me watch “Jaws.” I was 7 or 8. And that’s it, I’m done. I’m ruined. It ruined my experience of being in an aquatic environment, for my whole life. I honestly have a hard time in swimming pools.

Dan Heath: Emelia is deathly afraid of sharks. To this day whenever she’s in the water, she feels that creeping sense of vulnerability. And news reports about attacks just intensify that dread.

We’re going to try a little experiment with Emelia at the Vancouver Aquarium in British Columbia. We’ve paired her up with the aquarium’s resident shark expert.

Lee Newman: I’m Lee Newman, curator of fishes at the Vancouver Aquarium, and we’re standing in the Tropic Zone, in front of the shark exhibit. It’s kind of interesting why we see those certain types of sharks: great whites, tigers, oceanic white tips, things like that those are the types of sharks that people often bump into doing things thatpeople like to do—which is hanging out near the coast, go surfing, which I would never do—ring the dinner bell …

Tiger sharks, for example, are non-discriminate. Sea turtles are their preferred menu item, but they’re not that fussy. And then great whites are very specialized, in that they need to eat mammals. The thing is, they’re not always perfect at telling the difference between a seal on the surface and a person on the surface, especially on the aforementioned surfboard.

Dan Heath: What we’re doing here is priming Emelia. We’re asking her to concentrate on sharks, even though she’d probably prefer not to. Fortunately, she’s a good sport.

Emelia: You have scientifically proven to me that my fear is founded. You’re wrecking my experience of water, and any ideas of taking my children to swim with the dolphins in Hawaii. So thank you, and also, not thank you.

Dan Heath: Now, to make matters worse, Lee is going to have Emelia interact with something at the aquarium that is far more dangerous than a shark. Something that kills more people every year, on average, than all of the shark attacks combined.

We’ve blindfolded Emelia and walked her through the aquarium to the special exhibit.

Emelia: I feel like we’re outside now. We’ve stopped. I feel like something’s gonna happen. Can I clarify something? This thing that I’m about to touch hurts more people than sharks, and is far more dangerous than sharks?

Dan Heath: Yep, it’s a vending machine.

Emelia: What? Vending machines?

Dan Heath: So maybe you’ve heard this statistic before. Based on a Consumer Product Safety Commission study, vending machines kill more people each year than sharks. To be clear, they’re not likely to hunt you down—people usually get hurt when they are rocking or tilting the machines to try to get their Fritos unstuck.

The point is that shark deaths are so rare—on average, roughly one American dies per year from a shark attack—that there are lots of things we interact with every day that are more deadly: Scissors. Tap water. Cars. Sugar. Even icicles.

Nobody refuses to go outside in the winter for fear of a falling icicle, and yet people worry so much about sharks that they won’t take their families to the beach. I mean, more people are attacked by cows each year than by sharks.

So back to Emelia. This information about vending machines, the information about sharks. Did any of this help her fear?

Emelia: I feel better. I actually feel better.

Dan Heath: So why do many of us fall prey—if you’ll pardon the expression—to Emelia’s largely irrational fear?

The reason involves something called the availability heuristic. A heuristic, by the way, is essentially a mental rule of thumb.

Dan Gardner: I’m Dan Gardner, author of Risk: The Science and Politics of Fear.

Basically, when we try to figure out how common something is or how likely something is to happen, we try to think of an example of that thing. If that example comes to us easily, then that thing must be common or likely to happen. If we struggle to come up with an example, then that thing must be uncommon or unlikely to happen.

The wonderful thing about it is that it very, very often works. Particularly it works in the environment in which our brains evolved, which is on the plains of Africa living as hunter-gatherers. If you imagine that environment, the availability heuristic really works well. You’re walking along, you see a shadow in the long grass, you think to yourself, should I be worried about lions? You will immediately try to think of an example of a lion emerging from the long grass and dragging somebody to a screaming death.

If you can easily recall a time that a lion emerged from the long grass, you should probably think that that’s likely to happen again, be afraid.  

Dan Heath: The availability heuristic is actually a pretty useful shorthand. Take divorce as an example. Think about all of your friends who got married and later divorced. Now think about all your friends who got married and stayed married. Roughly what percentage of your friends would you say ended up getting divorced? Maybe you came up with a guess somewhere in the vicinity of a quarter to a half, which would be a pretty good guess, since the actual divorce rate in the U.S. is somewhere between 30 and 40%.

So if the availability heuristic is useful, why is it considered a bias? Well, it’s because something changed in our world. In the evolutionary environment, it might have been pretty accurate to assess the risk of lions by asking, Can I think of a time when a lion jumped out of the tall grass? But then a new force was introduced: the media. Now you can hear stories about people across the world being mauled by lions who jumped out of the tall grass. And a TV network starts promoting Mauled by Lions Week with nonstop stories. And as a result, our mental calculations change.

Dan Gardner: We take that information and then you run that through your ancient primitive heuristic, availability heuristic, and you say to yourself, should I be afraid of this fantastically rare thing? Well, I’ll try to think of an example of it. If you can easily think of an example of it, well, you just saw an image of it through social media or on the news, then that thing must be common or likely to happen, so you should be afraid, right?

Dan Heath: The media systematically publicizes these sorts of stories. The rare ones, the lurid ones, the surprising ones. The ones that spark emotion. You can be sure that if there was a rabid demon billy goat that went on a killing spree, it would dominate the news cycle for weeks. Suddenly parents would stop taking their kids to petting zoos. And you could bring the rational statistics to those parents and say, “Now, now, look, you’re more likely to be fallen on by a vending machine than to be killed by a demon billy goat.” But it’s hard for statistics to compete with these powerful stories.

Dan Gardner: In science, they say anecdotes aren’t data. Anecdotes, vivid stories, they’re all very nice, but they don’t really tell us what. You got to look at the data.

Well, human nature is just the opposite. It says data aren’t anecdotes. That’s great, you got your numbers, that’s terrific, but hey, the power of an example, that’s what I really care about.

This is the origin of that very strange way of assessing evidence. Never underestimate the power of examples to sway us in ways that are not healthy, that cause us to misperceive reality—particularly in the information age environment.

Dan Heath: Keep in mind, this same effect happens with positive events, too. Think of the stories of lottery winners. In the same way that the emotion of shark attacks inflates your perception of the risk to you, the stories of ecstatic lottery winners inflates your perception of the likelihood that you’ll win. Because you’re doing that same mental calculus—can I think of someone who has won the lottery? And the media has messed with the accuracy of that calculation by implanting those stories.

And if you think, well, I’m too smart to play the lottery, I’m immune from this bias, then ask yourself this: Have you heard some of these stories of all the people making a mint on cryptocurrencies? And did you feel a little tickle of envy and desire? Maybe I should get in now before the currencies spike again? There are a lot of biases wrapped up in that envy and that desire, but one of them is the availability heuristic—you’re overweighting the chances of winning because now you can easily access stories of winners.

I’m Dan Heath, and this is Choiceology—an original podcast by Charles Schwab. It’s all about the psychological forces that influence the way we make decisions. By the way, Schwab has written an article about how the availability heuristic hurts our judgments. It talks about how this bias can throw off your ability to judge probability and risk, encouraging both excessive risk taking and excessive risk aversion. You can find a link to the article in the show notes.

Why did we start our episode with that story of Ranie Pearce and the tiger sharks? Because we wanted you to see what this bias feels like. It’s such a gripping story—your mind just drinks it in. You vicariously swim along with her. The tale is absorbing, memorable.

Then, later, when we come back and share the statistics about how unlikely shark deaths are, it’s like a pale imitation. It’s like trying to put out a fire with an eyedropper of water. That’s Dan Gardner’s point about how our minds prize anecdotes over data.

The interesting thing is that Ranie Pearce—who, let’s agree, would seem to be a person with an evidence-backed reason to be afraid of sharks—she’s actually considering another attempt at swimming the Molokai Channel:

Ranie Pearce: I started to think, “Well, it’s been two years, maybe I should go back and try again.” I just feel like I have unfinished business with Hawaii. I would really like to overcome that, and I would like to make that swim again.

Dan Heath: How can you be bumped and stalked by tiger sharks and say to yourself, “Hey, I’d like to give that another shot”?

Part of the reason is that Ranie has so many counter-examples she can draw on. Remember that thought experiment about how many friends have been married and stay married versus friends who got divorced? Well, when Ranie thinks about the risk of sharks, she can easily call up the story we heard of her near-attack. But then, if she thinks about times when she swam without fear of sharks, there are hundreds of other examples she can call to mind. And so she’s able to calibrate her fear in that way, to keep it in perspective.

Ranie Pearce: You’re supposed to follow your passions and have your adventures and have your excitements, and sometimes there’s risk involved. I don’t want to take unnecessary risks, and I don’t plan on it, but I do want to try it again.

Dan Heath: Max Bazerman, a professor at Harvard Business School, has a great point about this sense of keeping things in perspective. He says the availability heuristic often distorts our sense of the relationship between variables.

So here’s an example. Is playing sports in high school related to poor academic performance? The first thing your mind does is go looking for examples of dumb jocks. That’s the “lion jumping out of the tall grass” thing, right? That’s the availability heuristic. Can we access an example? And I think most of us can say, yep, we know a few. So those examples are inflating our sense of the link between playing sports and poor grades.

But Bazerman says that’s distorted reasoning and we can correct it. You ask yourself a few more questions: Did I know any high school athletes who were good students? Well, yeah, of course. And do I know anybody who got bad grades who wasn’t an athlete? Sure, plenty of people. And do I know anybody who got good grades who wasn’t an athlete? Yep.

You see what we’re doing there? We’ve got two variables with two conditions each: You can play sports, or not, and you can earn good grades, or not. So there are four possible conditions in total. If we just look for examples of only one of those conditions—dumb jocks—it’s easy to deceive ourselves into thinking there’s a correlation. But once we think our way through the other three—smart jocks, smart non-jocks, failing non-jocks—we see how easy it is to come up with counter-examples, and by the time we’re finished, it’s intuitive that there’s probably no link whatsoever between playing sports and making bad grades. The point is, our brains are pretty good at digging up examples. But we can’t just rely on the easiest examples to access—we’ve got to be more disciplined about finding the right examples.

By the way, I know the kind of easy, smarty-pants conclusion about the availability heuristic is to say: Always be suspicious of anecdotes and anecdotal thinking. And, look, if you’ve got a trustworthy data set to rely on, you should. But in many of life’s most important decisions, we don’t have those data sets. Where’s the data set for how to handle a rough period in your marriage?

And if you think about people who give you really good advice—people who are wise—my guess is that one of the reasons for that wisdom is that they’ve lived long enough, and seen enough of life, that they have a whole collection of stories in their head. In other words, when someone asks them for marital advice—should my spouse and I go to marital counseling?—these wise people can call up stories in different categories: Some stories of people who tried counseling and it worked. Other people who tried counseling and it didn’t work. And more people who didn’t try counseling at all—did their relationships improve naturally or decline?

I’m not suggesting that they go through this consciously as a process—it’s more about having a well-trained intuition. Maybe part of wisdom is having collected so many stories that the availability heuristic actually is pretty well-calibrated with the complexities of life.

And by the way, if you ask a wise 70-year-old about the risks of the beach, my guess is that they'll say that the big risk is not going enough. And if you want to worry about something while you’re there, forget sharks. Focus on the sunburns. Those can really come back to haunt you.

You’ve been listening to Choiceology—an original podcast from Charles Schwab

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Next time on the show, another psychological effect that influences the way you shop, the way you invest … and how well you negotiate deals.

I’m Dan Heath. Talk to you next time.

Disclosures: All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Investing involves risk, including risk of loss.

Important Disclosures

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Investing involves risk, including risk of loss.

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