Connect with us

Misc

Every Single Cognitive Bias in One Infographic

Published

on

View a high resolution version of this graphic
Cognitive Bias Infographic

Every Single Cognitive Bias in One Infographic

View the high resolution version of today’s graphic by clicking here.

The human brain is capable of incredible things, but it’s also extremely flawed at times.

Science has shown that we tend to make all sorts of mental mistakes, called “cognitive biases”, that can affect both our thinking and actions. These biases can lead to us extrapolating information from the wrong sources, seeking to confirm existing beliefs, or failing to remember events the way they actually happened!

To be sure, this is all part of being human – but such cognitive biases can also have a profound effect on our endeavors, investments, and life in general. For this reason, today’s infographic from DesignHacks.co is particularly handy. It shows and groups each of the 188 known confirmation biases in existence.

What is a Cognitive Bias?

Humans tend to think in certain ways that can lead to systematic deviations from making rational judgments.

These tendencies usually arise from:

  • Information processing shortcuts
  • The limited processing ability of the brain
  • Emotional and moral motivations
  • Distortions in storing and retrieving memories
  • Social influence

Cognitive biases have been studied for decades by academics in the fields of cognitive science, social psychology, and behavioral economics, but they are especially relevant in today’s information-packed world. They influence the way we think and act, and such irrational mental shortcuts can lead to all kinds of problems in entrepreneurship, investing, or management.

Cognitive Bias Examples

Here are four examples of how these types of biases can affect people in the business world:

Familiarity Bias: An investor puts her money in “what she knows”, rather than seeking the obvious benefits from portfolio diversification. Just because a certain type of industry or security is familiar doesn’t make it the logical selection.

Self-Attribution Bias: An entrepreneur overly attributes his company’s success to himself, rather than other factors (team, luck, industry trends). When things go bad, he blames these external factors for derailing his progress.

Anchoring Bias: An employee in a salary negotiation is too dependent on the first number mentioned in the negotiations, rather than rationally examining a range of options.

Survivorship Bias: Entrepreneurship looks easy, because there are so many successful entrepreneurs out there. However, this is a cognitive bias: the successful entrepreneurs are the ones still around, while the millions who failed went and did other things.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Comments

Markets

Ranked: The Best and Worst Pension Plans, by Country

As the global population ages, pension reform is more important than ever. Here’s a breakdown of how key countries rank in terms of pension plans.

Published

on

Ranked: Countries with the Best and Worst Pension Plans

The global population is aging—by 2050, one in six people will be over the age of 65.

As our aging population nears retirement and gets closer to cashing in their pensions, countries need to ensure their pension systems can withstand the extra strain.

This graphic uses data from the Melbourne Mercer Global Pension Index (MMGPI) to showcase which countries are best equipped to support their older citizens, and which ones aren’t.

The Breakdown

Each country’s pension system has been shaped by its own economic and historical context. This makes it difficult to draw precise comparisons between countries—yet there are certain universal elements that typically lead to adequate and stable support for older citizens.

MMGPI organized these universal elements into three sub-indexes:

  • Adequacy: The base-level of income, as well as the design of a region’s private pension system.
  • Sustainability: The state pension age, the level of advanced funding from government, and the level of government debt.
  • Integrity: Regulations and governance put in place to protect plan members.

These three measures were used to rank the pension system of 37 different countries, representing over 63% of the world’s population.

Here’s how each country ranked:

CountryOverall ValueAdequacySustainabilityIntegrity
Argentina39.543.131.944.4
Australia75.370.373.585.7
Austria53.968.222.974.4
Brazil55.971.827.769.8
Canada69.27061.878.2
Chile68.759.471.779.2
China48.760.536.746.5
Colombia58.461.44670.8
Denmark80.377.58282.2
Finland73.673.260.792.3
France60.279.14156.8
Germany66.178.344.976.4
Hong Kong61.954.554.586.9
India45.839.944.956.3
Indonesia52.246.747.667.5
Ireland67.381.544.676.3
Italy52.267.41974.5
Japan48.354.632.260.8
Korea49.847.552.649.6
Malaysia60.650.560.576.9
Mexico45.337.557.141.3
Netherlands8178.578.388.9
New Zealand70.170.961.580.7
Norway71.271.656.890.6
Peru58.56052.464.7
Philippines43.73955.534.7
Poland57.462.545.366
Saudi Arabia57.159.650.562.2
Singapore70.873.859.781.4
South Africa52.642.34678.4
Spain54.77026.969.1
Sweden72.367.57280.2
Switzerland66.757.665.483
Thailand39.435.838.846.1
Turkey42.242.627.162.8
UK64.46055.384
U.S.60.658.862.960.4

The Importance of Sustainability

While all three sub-indexes are important to consider when ranking a country’s pension system, sustainability is particularly significant in the modern context. This is because our global population is increasingly skewing older, meaning an influx of people will soon be cashing in their retirement funds. As a consequence, countries need to ensure their pension systems are sustainable over the long-term.

There are several factors that affect a pension system’s sustainability, including a region’s private pension system, the state pension age, and the balance between workers and retirees.

The country with the most sustainable pension system is Denmark. Not only does the country have a strong basic pension plan—it also has a mandatory occupational scheme, which means employers are obligated by law to provide pension plans for their employees.

Adequacy versus Sustainability

Several countries scored high on adequacy but ranked low when it came to sustainability. Here’s a comparison of both measures, and how each country scored:

Ireland took first place for adequacy, but scored relatively low on the sustainability front at 27th place. This can be partly explained by Ireland’s low level of occupational coverage. The country also has a rapidly aging population, which skews the ratio of workers to retirees. By 2050, Ireland’s worker to retiree ratio is estimated to go from 5:1 to 2:1.

Similar to Ireland, Spain ranks high in adequacy but places extremely low in sustainability.

There are several possible explanations for this—while occupational pension schemes exist, they are optional and participation is low. Spain also has a low fertility rate, which means their worker-to-retiree ratio is expected to decrease.

Steps Towards a Better System

All countries have room for improvement—even the highest-ranking ones. Some general recommendations from MMGPI on how to build a better pension system include:

  • Increasing the age of retirement: Helps maintain a more balanced worker-to-retiree ratio.
  • Enforcing mandatory occupational schemes: Makes employers obligated to provide pension plans for their employees.
  • Limiting access to benefits: Prevents people from dipping into their savings preemptively, thus preserving funds until retirement.
  • Establishing strong pension assets to fund future liabilities: Ideally, these assets are more than 100% of a country’s GDP.
  • Pension systems across the globe are under an increasing amount of pressure. It’s time for countries to take a hard look at their pension systems to make sure they’re ready to support their aging population.

    Subscribe to Visual Capitalist

    Thank you!
    Given email address is already subscribed, thank you!
    Please provide a valid email address.
    Please complete the CAPTCHA.
    Oops. Something went wrong. Please try again later.

Continue Reading

Maps

Animated Map: The History of U.S. Counties

This video highlights the history of American counties, and how their boundaries have changed over the last 300 years.

Published

on

Animated Video: The History of U.S Counties

Did you know that there are 3,142 different counties in the U.S. today?

Going as far back as the 1600s, English settlers arriving in the New World envisioned counties as a means of accessible government—a county seat was meant to be within a day’s buggy ride for every citizen.

While the role of counties in local government has remained significant in modern times, their boundaries have changed drastically over the years.

This animated map by Alexander Varlamov visualizes the history of U.S. county borders, and how these jurisdictions have evolved over time.

County Equivalents

Before diving in, it’s important to note a few county-equivalents that function similarly but go by different names:

  • Boroughs/Census areas: Alaska is made up of 19 boroughs, but the majority of its landmass is not included in them. Rather, it’s officially labeled by the Alaskan government as the unorganized borough.
  • Parishes: Instead of counties, Louisiana uses the term parishes because of its French and Catholic heritage.
  • Independent cities: These are cities that operate outside their surrounding county’s jurisdiction. There are 41 independent cities in the U.S. and 38 of them are in Virginia.

Over 300 Years of Growth

The number of counties in the U.S. has increased dramatically since the early days of American history. Here’s a look at their growth since 1790:

YearNumber of Counties and Parishes
1790292
18501621
18702247
19002713
19203041

The first county was established in 1634, over 100 years before the first Census was taken (and long before America gained independence). It was created in James City, Virginia—an interesting location, considering Virginia now has the highest concentration of independent cities.

Why does Virginia have so many independent cities? The state’s separation of counties and cities dates back to the early 1700s. With a rural population and low productivity, it was difficult to establish town centers. After several attempts, the General Assembly gave up. Independent cities were established instead.

Short-lived Counties

Counties as a political organization have been around for hundreds of years, but some individual counties haven’t lasted long.

For instance, Bullfrog County in Nevada was established in 1987 and dissolved just two years later. During its brief existence, it had no population and no infrastructure—and its primary purpose was simply to prevent Yucca Mountain from becoming a nuclear waste dump.

While Bullfrog County has since been dissolved, the controversy around the nuclear waste site is ongoing as of 2020.

Continual Change

The latest official county, Broomfield Country, was established in Colorado in 2001.

Although it’s been decades since the last county was created, there have been continual boundary changes and status updates—sometimes for political reasons. For instance, the Supreme Court recently ruled that half of Oklahoma is within a Native American reservation. While this doesn’t necessarily change ownership, it does affect jurisdiction and county authority.

Though the lines on the map are more or less static now, the invisible lines of county jurisdiction will continue to change and evolve over time.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Subscribe

Join the 190,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular