What is an example of the base rate fallacy?
The following fictional scenario is an example of the base rate fallacy:
A search for extraterrestrial intelligence (SETI) program develops an algorithm with 99% accuracy for identifying alien signals among cosmic noise, where the actual occurrence of alien signals is estimated to be only 1 in a million. When the algorithm flags a signal as alien, the media reports that alien life has been contacted. This assumption is based on the algorithm’s high accuracy rate, but it ignores the extremely low probability that the signal is from alien life.
In this example, the media commits the base rate fallacy by ignoring statistical reality and focusing on a specific incident. Given the base rate of 1 alien signal in a million, the vast majority of flagged signals are false positives.