Tail-End Consequences

“…there are three distinct sides of risk:

* The odds you will get hit.

* The average consequences of getting hit.

* The tail-end consequences of getting hit.

…tail-end consequences – the low-probability, high-impact events – are all that matter.

In investing, the average consequences of risk make up most of the daily news headlines. But the tail-end consequences of risk – like pandemics, and depressions – are what make the pages of history books. They’re all that matter. They’re all you should focus on.”

-Morgan Housel, “The Three Sides of Risk.” The Collaborative Fund. May 19, 2020

Noticing Consequences

“For the record, the degree of conscious intent of any behavior is a mildly interesting facet, but I’m less interested in it than are most. This is in part because I’m inclined to give people less of a moral or legal pass on the harms resulting from their behaviors if they did not consciously intend such consequences. It is just too easy for people to not notice consequences, when they find it in their interest to not notice.”

—Robin Hanson, “Authentic Signals.” OvercomingBias.com. November 18, 2017.