Survivorship Bias
Survivorship bias is the logical error of concentrating on the people or things that made it past some selection process and overlooking those that did not, typically because of their lack of visibility.
- Also known as "survival bias"
- This can lead to false conclusions in several different ways. It is a form of selection bias
- In investing, this applies to index investing - indexes often remove companies that under-perform
- The average lifespan of S&P 500 companies has dropped over time
- was 60 years in 1958
- about 20 years in 1980
- less than 20 years in 2012