What is subjective probability?

Subjective probability is a measure of a likely outcome determined by an individual's personal point of view. Unlike most forms of probability, which are based on mathematics, subjective probability has little or no actual mathematical data involved in its outcome. The most important factor in this form of probability is the point of view of the individual making the decision. This is often the first or last step in determining an unpredictable outcome and is a common means of assessing group mindset or making data-less decisions.

In most cases, probability is the study of situations to determine their absolute outcome. The probability of an area receiving rain, a person turning left at an intersection, or any other option is divided into a series of mathematical equations. These numbers are manipulated to find underlying causal factors, which will show how likely certain actions are to occur.

The term subjective means "relating to a subject", which is precisely the meaning of this type of probability. A person makes an assessment of a likely outcome based on their own beliefs and experiences. This form of decision making has a great deal of imprecision and bias in trying to replicate real-world situations, so it is often used for other purposes.

An example of the difference between the two forms of probability is pre-qualifying the outcome of a sporting event. In standard probability, previous encounters between participants are broken down into mathematical information. The possible interactions between the key individuals are determined and the process finds the probability that one group will beat the other. With subjective probability, a person calculates the winner based on their personal experience with the participants and what they have seen in the past. Both methods are common and both have a similar rate of accuracy when performed by professionals.

When subjective probability is used to determine a group's mindset, it is usually achieved through surveys. A large group is asked to give their opinions on a particular topic, and the numbers show the mindset. At the end of the study, most of the group can believe in the inevitability of a certain result. This does not mean that the outcome is more likely, it simply means that members believe it is more likely. Although this data is subjective, it reflects the thoughts of a group, which can lead organizations to act in a certain way.

It is also common to use subjective probability to determine outcomes where there is not enough data for a normal decision. When faced with a series of options and no additional information, a person will unconsciously calculate the various outcomes of different actions. You will then make a decision based on a 'gut feeling' or hunch; in essence, it makes a decision based on subjective probability.

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