Extreme value theory and how it can impact our lives

JANUARY 16 — Not so fun fact: Our lives are often judged not by how we regularly live it but by its most extreme events.

Example: My life can be relatively normal for the past, say, 50 years (ie I grow up, go to college, get a job, get married, etc.) but if a few weeks after my 51st birthday I commit suicide or kill someone or create a start-up worth a billion dollars, those extreme events will end up becoming the lens through which my past five decades are evaluated.

People will start asking how my university years may have affected me, or how my upbringing or what-not “radicalised” me towards a propensity for violence or shaped by thinking about entrepreneurship, etc.

At the very least, almost the only thing people will remember when they see my name is that event alone.

Practically nothing else.

The good news is that maybe we can learn to put ourselves in ‘places’ where positive manifestations of EVTs can occur. — Unsplash pic

It’s strange but that’s the way the cookie crumbles. Our capacity for remembering the lives of other people is already fairly limited, so obviously our minds zoom in on those occasions which stand out spectacularly.

This is perfectly natural and to be expected; what’s noteworthy, though, is when that outstanding element becomes all-encompassing and “changes everything.”

There is a branch of statistics called Extreme Value Theory in which an extraordinarily high value overwhelmingly impacts the entire set of numbers, even shifting the average by a huge per centile.

A simple example is salaries. If you take the monthly pay of 100 junior staff in, say, an insurance company, any one of their wages will not substantially impact the average.

But if you add the salary of the CEO of the regional group into that set, suddenly this new addition could mutate the average to an unrecognisable number.

It’s like adding JK Rowling’s earnings to the earnings of the average 10,000 authors just barely making a living from the sales of their books.

That’s extreme value — when one factor changes everything.

What’s the relevance of EVT to our lives?

I’m not a huge fan of Tony Robbins but I do recall him saying something to the effect that our lives can change in an instant. One meeting, one email, one speech, one tweet, one bad acquaintance, one special friend and our world can tilt on its axis.

The good news is that maybe we can learn to put ourselves in “places” where positive manifestations of EVTs can occur. This is why many good mentors counsel us to tinker, to try new things, to meet new people, to join new projects, to check out new places and so on.

We just never know what can happen.

You could say it’s the epitome of “working smart.” Do enough new and unexpected things and, who knows, we could be struck by lightning (in a, uh, healthy or lucrative way).

Of course, one bad day or wrong move can also result in everything changing... and not for the better. I think Will Smith would agree.

Ditto if we regularly drive like maniacs on the highway. One careless moment, two seconds’ loss of control and everything could be irreversibly over.

If nothing else, maybe we all need to take a good hard look at our daily habits. Both the healthy and unhealthy ones could produce major disruptions in our lives, some great and some terrible.

Again, we just never know, do we?

* This is the personal opinion of the columnist.