Human reversion to the mean

I added the word “human” to this title so that it would be clear to all that this is not a statistical article. According to Wikipedia (lazy man’s encyclopedia)…

• Regression toward the mean simply says that, following an extreme random event, the next random event is likely to be less extreme.

 

Ive often heard this term thrown about in the context of stock market returns where in theory over the long term the market provides returns in line with long term averages. However, my interest in this concept is rather in terms of human behaviour. Do we have an average or mean level of default behavior that we revert to over the long term?

 

If I am generally successful but go through a period of poor performance or deterioration, should I rest well knowing full well that I will be OK in the long run? Or in the negative scenario if I generally struggle at something in life, should I expect poor results in the future despite my short term success right now?

 

If I experience a particular traumatic event should I rest well knowing that the next event will be less traumatic? Or on the contrary if I have a particularly uneventful year, should I assume that some level of disaster is around the corner? Is there actually a mean or average level of human behaviour or endeavor that we default to in the long run?

 

My point of view on this is that one must always be directed by a long term view. Each short term action should contribute to what we hope to achieve in the long run (the mean). This way when we experience short term ups and downs we can easily revert back on track to what we aim to achieve overall. I also find it difficult to pre-determine the outcome of someone’s life and quite like the idea that not everything is linear and can be predicted. There are some variables that contribute significantly to a person’s long term well-being such as nutrition, education and healthcare. But I know too many success stories of people who overcame their own variables and became extremely successful. I wrote about one in this blog post about my own father.

What’s your take on this?