Odds are you have bought at least one lottery ticket in your life, even though your chance of winning was one in a million—or, if you play Mega Millions, more like 1 in 302,575,350.
But people are generally bad at assessing probabilities, often relying on anecdotal evidence to make decisions rather than considering the numbers.
“When we hear about someone winning the lotto or being struck by lightning three times, we think it’s more common than it really is,” said Christoforos Anagnostopoulos, a statistician at Imperial College London. “We use heuristics based on entirely irrelevant situations.”
According to the research of Ellen Peters, an expert in decision making at the University of Oregon and author of “Innumeracy in the Wild,” the lack of skill can have consequences for your wallet and your health. People who are less numerate adopt fewer healthy behaviors; they are 40% more likely to have a chronic disease; they end up in the hospital or emergency room more often; and they take 20% more prescription drugs, but are less able to follow complex health regimens.
Those who are good with numbers and confident in their ability fare better, Dr. Peters has found. And those who are bad with numbers but feel confident in their ability do the worst.