Anyone that has tuned into a football game lately should be familiar with the bombardment of advertisements for online gambling sites. Since the lifting of restrictions on sports betting in the past couple years, these sites have seemingly replaced beer, car, and insurance commercials for the most advertised product on the broadcast of an NFL game. Without making a too-on-the-nose comment about the target audience for beer, cars, and insurance, advertising sports betting services to football fans is incredibly on-the-nose. Even shows devoted to talking about sports, such as those on ESPN, will scroll through the sporting events coming up that night, providing more than just the time and channel, but an array of information that was non-existent on these programs just a couple of years ago, such as "the line," the over/under, and a team’s statistical percentage of winning the game.
And it is not just the sports world. As one of those sports betting sites proclaims in its commercial, "Life is a bet," providing examples of the "bets" we make in everyday life, whether it’s deciding to attend that party, go on that date, purchase that stock, or eat that left over Chinese food. What we are ultimately talking about is risk versus reward—what would you give up now for something potentially greater in the future.
With yet another lottery jackpot having grown to over $1billion, a great many of us would have no trouble forking over $20 to purchase some tickets for a shot at $1 billion. Just a few years ago, the lottery slogan supported the same mentality in its slogan, "You can’t win if you don’t play."
"I’d be happier with the dollar!"
The other end of the risk-reward paradigm is best described, I believe, by an old episode of The Simpsons. An automated phone recording by Homer offers unlimited happiness to those who’d send $1 to Happy Dude and reminds the recipient that "Happiness is just a dollar away." In response, Mr. Burns says, "I’d be happier with the dollar!"
In tandem with the emotion of it, risk and reward are heavily influenced by information, knowledge of the subject, and the confidence level of both. For years, and decades, Bernie Madoff’s clients continued to invest with him because of their confidence—at the time—that Madoff was seemingly never wrong and continued to consistently make them money, in situations where others could not. Unfortunately, it turned out that Madoff took all of these clients’ money and never bought one share of stock. Kind of like a bookie that takes your money and never makes a single bet.
Information, knowledge, confidence, and an appreciation of risk and reward are also important in quality. As Heather A. Wade writes, "We cannot simply ignore the risk associated with a measurement by ignoring its associated uncertainty of measurement."
"We make decisions every day based on risk. Some of these decisions are so common that we see them as natural parts of life," she writes. "Can I see the traffic coming so I can move my car across traffic to safely reach where I am going? Do I need to pack a jacket or umbrella in case of rain later? Many of these decisions are binary (yes or no) and are based on a quick analysis of potential outcomes and their likelihood of positive and negative occurrences for us. With any decision, there is uncertainty in which outcomes and/or occurrence likelihoods are unknown to the decision-maker. How could one know that even though they packed a jacket and umbrella for potential rain, they had not accounted for the bridge to fail and crush them to death? While the likelihood of bridge collapse occurrence was low, the severity of the bridge collapse was high. These potentials are part of the overall uncertainty in life. We have to balance our risk appetite with our desire to live and get things done."
So read Heather’s article, "The Elephant in the Room, or the Impact of Measurement Uncertainty on Risk," and check out the results of our annual Leadership Survey, in this month’s Quality.
Enjoy and thanks for reading!
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