The Idea

Contributed by @philhagspiel |  Edited and curated by @philhagspiel

The best will always appear to get worse and the worst will always appear to get better over time.

Logic & Reasoning

Finding Truth

Sports stars who play a phenomenal season or ourselves being on an extraordinary winning streak at work — our performance will eventually get worse.

While the science of performance is complex and context-dependent, random chance always plays some role in basically everything we do. Regardless of our skills at playing basketball or picking effective business strategies, randomness will influence the outcome to some degree.

Whenever someone performs extraordinarily good or bad, luck or bad luck will have played some role. This means that outcomes are not perfectly correlated with skill (they almost never are).

As luck and bad luck themselves aren't stable over time, the following scenarios are highly relevant:

• I perform extremely well which is partly based on luck. As luck isn't stable, but will itself even out over time, the "random" (lucky) part of my performance will get worse at some point — my performance declines overall.
• I perform extremely bad which is partly based on bad luck. As bad luck isn't stable, but will itself even out over time, the "random

The principle of Regression To The Mean applies whenever we encounter strong deviations from averages (or means) or look at extreme groups.

It explains not only changes in observed performance but, for example, also why very intelligent people marry partners who are less intelligent than they are (it's way more likely to find someone who isn't as extraordinarily intelligent).

It further applies to business and science whenever we observe strong deviations from the mean values of a distribution (such as quarterly earnings or drug effectiveness values over time).

Explore

➞ This Veritasium Youtube video explains the concept beautifully in just over 7 minutes.

➞ In this Farnam Street blog post, the crucial relationship between Regression To The Mean and statistical correlation is explained nicely.

➞ This article explores the urban legend of the "Sports Illustrated Cover Jinx" which can be explained by Regression To The Mean.

Resources

If this idea resonates with you, some of these resources might add value to your life.