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odds making

I just completed my first pass through quantifying my priority setting. While people can vary dramatically in their assessments of the odds certain things will take place, the exercise and format are quite enlightening. Spreadsheets are a natural tool for this exercise, though paper and pencil can accomplish the same task.

Column A is the “possibility”; what might or could happen in 2012. What does anybody guess will happen? What do you read, hear or think may go right or wrong? What should you buy insurance for or against? What should you plan for? What can you hope for?

In column B you assign some odds to those possibilities. For example, I put down that one year out of 20 we will experience a major crop failure; assigning 1/20 to that possibility in column B. Research and discussion would be helpful, but your own guess will work fine on the first pass.

Column C, probability, is just a duplicate of B except it is in percentage format. This is where spreadsheets starting proving their worth as 1/20 can automatically convert to 5%. You don’t actually need the duplicate columns, but it helps with both the math and visualization.

Column D is the severity of the event. Assign a number from 1 to 10 on how badly (or nicely) your life, family and well-being would be impacted if the event were to take place. Starting with your death as a 10 as that is Game Over. I didn’t use zero for anything, but “economic recovery” did get a 0.1 from me. As I noted in column F “who needs a plan, the rising tide raises all ships.”

Importance, in Column E is another beauty of spreadsheets as it is simply a calculated value taking C times D. Thus as I considered the possibility of a monetary system collapse being 1 out of 2 or 50%, and the severity of that event being a 7 on a one-to-ten scale, the importance for us to plan on it multiplies out to 35, or third highest of the priorities on my list. This, by the way, is quite obviously the key information provided by this exercise.

Which brings me to column F, which I didn’t post here as it wrecked the format of the chart below. “Mitigation” is my label. What can you do to mitigate the negative impact. Beans, bullets, bullion, bugout, political activism, community action…

One thing I found as I made stuff up: The monetary collapse is very key. If, as I do, you think the possibility of a monetary collapse is 50/50, then the odds of fuel cost doubling (or worse), Internet shutdown, martial law and all sorts of ugly results become much more likely. Thus if it is one out of two for a collapse and one out of three that collapse will result in Govt VS people armed conflict, then you have just determined that armed conflict odds are one in six. Yikes!

On to the chart:

possibility . . . . . . odds . . probability . . severity . . importance
——————————————————————
hyperinflation . . . . . . . . . . . . . . . . . .2/3 . . 67% . . 6 . . 40
fuel cost doubling (in dollars) . . . . . . 8/10 . . 80% . . 5 . . 40
monetary system collapse . . . . . . . ..1/2 . . 50% . . 7 . . 35
government Internet shutdown . . . . . .1/4 . . 25% . . 9 . . 23
armed conflict: govt vs people . . . . . . 1/6 . . 17% . . 9 . . 15
cultural collapse, warlord economy . . . 1/6 . . 17% . . 9 . . 15
martial law, successful fascist takeover . 1/6 . . 17% . . 9 . . 15
government taking of pantry . . . . . . . . .1/6 . . 17% . . 8 . . 13
major distribution failure . . . . . . . . . . . . .1/3 . . 33% . . 4 . . 13
job loss . . . . . . . . . . . . . . . . . . . . . . . 1/6 . . 16.7% . . 7 . . 12
economic decline . . . . . . . . . . . . . . . . 9/10 . . 90% . . 1 . . 9
physical detention by central authorities . 1/12 . . 8.3% . . 9 . . 7.5
death by central authorities . . . . . . . . . 1/20 . . 5% . . 10 . . 5
burglary . . . . . . . . . . . . . . . . . . . . . . 1/40 . . 2.5% . . 7 . . 1.8
major crop failure . . . . . . . . . . . . . . . . 1/20 . . 5% . . 3 . . 1.5
robbery at home . . . . . . . . . . . . . . . . . 1/80 . . 1.3% . . 8 . . 1
economic stagnation . . . . . . . . . . . . . 1/10 . . 10% . . 0.5 . . 0.5
area-wide natural disaster . . . . . . . . . 1/100 . . 1% . . 2 . . 0.2
death by natural causes . . . . . . . . . 1/1000 . . 0.1% . . 10 . . 0.1
economic recovery . . . . . . . . . . 1/10000 . . 0.01% . . 0.1 . . 0.0001