Innovation and the Base Rate
The base rate is the underlying probability unconditioned by prior events, and failing to consider it can lead to wrong conclusions. For example, while most people think driving away from home is safer because three out of four car accidents happen within 25 miles of home, the base rate tells us that people spend 90% of their time driving within 25 miles of home, making it safer. Likewise, when considering iPhone accidents, the base rate can help identify opportunities for innovation. In this case, understanding the base rate can help identify features, design aspects, and user habits that make iPhones safer in certain areas.