The Narrative Effect – the power of a good story

The weather forecast says there’s a 15% chance of rain. As I am leaving my apartment, I spot my umbrella by the door. Should I take it with me, I ask myself? Yes, I better had. It’s bound to rain if I now leave it behind.

No Erik!1 You have fallen foul of the narrative effect. The chance of rain has not changed with you seeing and ignoring your umbrella. However, it feels like it has – my mind has created a tale of poetic justice where I will be punished for not heeding the warning sign of my umbrella catching my eye as I go out the door.

The narrative effect: the reliance on a connecting story to interpret a series of events.

Our minds naturally seek meaning and connections in the events we encounter. This is a powerful tool that can help us make complicated situations easier to remember and more engaging. However, the search for a coherent narrative can sometimes lead us into trouble.

The narrative bias - assigning meaning where none exists 

The narrative effect makes us susceptible to assigning meaning or connections where none exist. John Oliver, speaking on Conan O’Brien’s podcast, highlights this search for greater meaning when he describes his experience of watching the contestants on the twee British cooking show, the Great British Bake-Off:

“…they're all on the edge of breaking down. It's not about the cake. It's never about the cake!”
John Oliver

Is this true, or is it sometimes simply about the cake?

Random events seem to be particularly difficult for us to understand and we find it tempting to assign narratives to (falsely) imply cause and effect or motivation. Take for example the idea of a hot hand in basketball. This is the belief that a player who scores many baskets in a row is playing above his normal level and will be more successful when taking subsequent shots. This narrative is so established that the 1990s video game NBA Jam even gave players flaming boots and superpowers if they scored 3 in a row. 

The idea of a hot hand has been extensively studied and in basketball is widely believed to be a fallacy. Indeed, some simple sums can show that a shooting streak is not such a surprising phenomenon without any elevation in a player’s ability. Consider the chances of a player scoring 5 baskets in a row. Making some convenient simplifying (yet not unreasonable) assumptions, let’s assume each player in the starting line-up takes 10 shots in a game and has an underlying shot conversion rate of 50%. The chance of any one player scoring 5 baskets in a row at some point in their 10 shots is around 62%, and the chance of any one of the starting line-up managing this in the game is 99%2– without anyone outperforming their usual skill.

Despite this evidence I am still drawn to the hot hand narrative and if I see Kyle Lowry sink 5 baskets in a row, I imagine his boots have caught fire and his next shot is sure to go in.

Internal narratives

To make sense of the world around us, we create internal narratives giving us a framework for our own beliefs. In psychological terminology, these internal narratives are known as a person’s schema. When we encounter new things that we don’t understand, we first try to fit them into our internal narrative. This process can be very helpful in correcting errors coming through our senses. If I meet someone pointing at their wrist, asking me “what’s the chime?”, my schema will step in and correct to the more familiar “what’s the time?”. However, the strength of our internal narrative can sometimes make new facts that challenge our preconceived ideas difficult to process. (This results in the myside bias, the subject of one of my earlier blogs).

The great power of storytelling

The narrative effect means that we are much more likely to believe a set of assertions if they fit a compelling narrative. This can be a powerful tool in the actuarial world where it can sometimes be difficult to picture the abstract hypothetical situations that underpin future risk. Scenario analysis, where explicit narratives are built up to make future risks feel more tangible, is a cornerstone of risk management and can be particularly useful to help people take abstract risks more seriously. At Club Vita we recently developed a set of future longevity scenarios mapping out possible aftereffects of the COVID-19 pandemic for our subscribers to use within their risk management frameworks.

These techniques also work for individuals. An individual with the option to save into a pension can sometimes find it hard to value something that won’t benefit them for many years to come. To tackle this problem, communication campaigns involving members picturing themselves in retirement with a detailed narrative around what their lives will be like have proved successful in driving engagement with saving.

…but with great power comes great responsibility

Given this power, we must be careful not to be biased by a strong story in our interpretation of underlying data, or worse still to try to adjust the facts to fit better with an established narrative.

In the UK, in the early 2000s life expectancy increased at a very high pace. At the beginning of the 2010s, the pace of these improvements dropped significantly. This drop in pace occurred just a few years after the 2008 economic crisis and coincided with significant cuts to public spending, known as austerity policies. The narrative that these austerity policies had caused the reduction of longevity improvements in the UK was compelling, however the actual situation is likely to have been more complicated. A tailing off of gains made in treating cardiovascular disease, a rise in Alzheimer’s and dementia, a frailty decline due to unusually harsh winters and heavy flu seasons and the 2000s being a decade of historically high improvements could also have been contributing factors – but incorporating all these drivers (and others) into a memorable story is difficult.

This temptation for simple or convenient narratives to explain complicated situations reminds me of the Mark Twain quote:

“Never let facts get in the way of a good story.”
Mark Twain

This could be the mantra of the Hollywood biopic industry. Indeed, Freddie Mercury did not get Queen back together just to play Live Aid, William Wallace is very unlikely to have been the father of Queen Isabella’s child (no matter what Stewart Lee says) and Robin Hood would not have managed to walk from Dover to Sheffield via Hadrian’s Wall in a day.

What do you think?

The power of a good story is undeniable and can make complicated situations more engaging and more memorable. However, we need to be careful we aren’t overlooking key facts in search of a compelling tale - some sets of events are unrelated or too complicated to warrant a simple narrative.


1. No to the idea that it is bound to rain. Whether it is a good idea to take my umbrella still depends on whether 15% is within my risk tolerance of getting wet that day. 

2. 1-0.38^5=0.9921

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