“Avoid generalisations” – that’s what were taught from the very beginning. If you generalise, you’re either racist, sexist, ageist, appearancist, intellectualist or some combination of the many other undesirable ‘ists’ with which we’d rather avoid being labelled. As any serial generaliser already knows, ’sweeping generalisations’ most often get swatted down with a “you can’t say that”.Technically, you can say anything you want, so what’s really meant by “you can’t say that” is more like “you can’t conclude that”, or in a slightly more mathematical-socialogical way: “you can’t extrapolate the characteristics of one individual to an entire population or subset thereof”.
Whilst generalisation is one of those crimes of reasoning, logic or simply attitude with which we all get familiar from a young age, its opposite concept, specialisation or particularisation, is most often overlooked and it’s something we’re all guilty of to a greater or lesser extent.
Specialisation, for our purposes, means extending the perceived characteristics of a group to oneself. The consequences of deciding that a certain rule applies to you because you have observed it or heard that it applies ‘in general’ can lead to, at best, errors in decision making, and at worst, personal catastrophe. And it’s something I see happening more and more around me. People say things like:
- Now is a good time to buy, but if I wait for the housing market to drop even further, I’ll get a better bargain.
- Populations with high levels of fat consumption in their diets tend to exhibit high levels of obesity. Fat consumption makes you fat, so I’ll go on a low fat diet.
- The economy is bad at the moment, I’ll wait to sell my business.
- I can’t afford to go out and eat, this country is in the middle of a financial crisis you know!
Last year, I was looking around for a small flat to buy in order to make a smart financial investment for the future. The housing market in Spain has fallen massively since its peak in 2007 and there were some very good value potential purchases out there. Yet I argued almost weekly with my father-in-law. “The market still hasn’t hit the bottom yet, you should wait more,” he’d say. “Prices are predicted to fall another 10% within the next 12 months – if you wait you’ll get a better bargain”.
Here’s the thing though. I don’t care whether the housing market drops another 10% or rises 15%. These percentages are averages of millions of properties up and down the country. I wasn’t planning on buying the whole available housing stock of Spain, or even a statistically significant representative sample of it. I was looking for one flat. I only needed to find one emergency sale, conduct one successful negotiation, or find one isolated anomaly and I would have my bargain. It wouldn’t matter if the price of housing were to drop 10% in the 6 months after my purchase – as long as I could get the flat under value I would have done well.
Don’t get me wrong, finding a bargain is significantly easier in a buyer’s market, but concluding that a general 10% fall in house prices will mean you can get the house you are interested in for 10% less is a mistake is a fallacy of specialisation.
Of course there are markets with such low variance in the value of transactions that the general is a perfect indicator of the specific. If I want to sell some shares and their price is 10% lower this month, then to a very tight degree of accuracy, I’ll get 10% less for them. If I partake in a fund that invests in a basket of shares and suddenly 50% is knocked off the value of the stock exchange, then I just lost about 50% of my money.
But even if the stock market falls 50%, somebody always comes out winning. Why? Because the headline statistic is always just an average. And averages are made up of a lot of stuff in the middle that follows the trend pretty closely, and then a few outliers that do crazy stuff. In the stock market example, there were probably a load of stocks that fell by about 50% along with a few that fell by much more and a few that actually rose.
Therefore, your task is to be on the positive side of average. To rise when everything else falls.
The current employment situation in Spain is bleak and has been for a long while. Youth unemployment is up somewhere around 50%.
What does that actually mean? Well, on average, across the whole country, only half of the young people eligible for work are actually in work. That’s the general picture, and it’s a genuine tragedy for the current ‘lost generation’. But that’s just the group perspective. If I am a young person looking for a job, what should I read into this static which is trumpeted loudly on the news almost every single day on national television? Should I assume that I have only a 50% chance of getting a job? Should I assume that I will have to wait 50% longer to find a job? That I will earn 50% less?
I’ve heard all of these conclusions.
The truth is that these statistics are almost irrelevant to any one individual. Yes, we should worry about them from a point of view of social consciousness and group economic prosperity. But to an individual, averages are just that, averages, and any individual has the ability to buck any trend with relative ease. You are one in ten million, a hundred million, 2 billion, do you think that the statistical world will implode because you have managed to find a flat for 20% less than its value, or find a job when 50% of your competitors can’t, or lose 10Kg on a high fat diet when the general advice is that high-fat diets make you, well, fat?
Did you know you have a 1 in 119 chance of dying by suicide? Damn, better be careful then. Or perhaps just don’t commit suicide.
Let this be our little secret. You are you, and that’s it. You are not representative of the average. The general does not apply to you. Be wary of generalisation, but be even more wary of specialisation. When the news tells you that taxes, divorce rates and the cost of of living have gone up, that educational standards, living standards and life expectancy have gone down, and that we’re in for a rubbish summer, turn off the TV and say “I don’t care – this year I will be richer, happier, smarter and healthier than ever”, and go out and do something to make that happen.