Base rate neglect (or base rate fallacy) is the tendency to ignore the general statistical frequency of an event when evaluating the probability of a specific case — overweighting specific (often vivid) information instead.

The Medical Example

A test for a rare disease (1 in 10,000 people) is 99% accurate. You test positive. What's the chance you actually have the disease?

Most people say ~99%. The correct answer is roughly 1%. Out of 10,000 people, 1 has the disease (99% chance test is positive). But ~100 others will also test positive (false positives). Only 1 out of ~101 positives actually has the disease.

The Lesson

Without anchoring on the base rate — how rare the condition is in the overall population — the test result is nearly meaningless.

Daily Applications

• Evaluating startup success odds without knowing industry failure rates
• Judging interview performance without base rates for the role
• Interpreting diagnostic results without knowing disease prevalence

Reference:

Wikipedia: Base Rate Fallacy

https://en.wikipedia.org/wiki/Base_rate_fallacy