What is Subjective Probability?

Subjective probability is a measurement of a likely outcome determined by an individual’s personal viewpoint. Unlike most forms of probability, which are based on mathematics, subjective probability has little to no actual mathematical data involved in its outcome. The most important factor in this form of probability is the viewpoint of the individual making the decision. This is often a first or final step in determining an unpredictable outcome and is a common means of assessing group mentality or making decisions without data.

In most cases, probability is the study of situations to determine their absolute outcome. The likelihood an area will receive rain, that a person will turn left at an intersection or any number of other choices is broken down into a series of mathematical equations. These numbers are manipulated to find underlying causal factors, which will show the likelihood of certain actions taking place.

The term subjective means ‘relative to a subject,’ which is precisely the meaning of this kind of probability. A person makes an assessment as to a likely outcome based on his own personal beliefs and experiences. This form of decision making has a huge amount of inaccuracy and bias when attempting 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 in pre-calling the outcome of a sporting event. In standard probability, previous encounters between the participants are broken down into mathematical information. The potential interactions between key individuals are determined, and the process finds the likelihood of one group winning over another. With subjective probability, a person calculates the winner based on her personal experience with the participants and what she has seen in the past. Both methods are common and both have a similar accuracy rate, when performed by professionals.

When subjective probability is used to determine the mentality of a group, it is often accomplished through polling. A large group is asked its opinions on a certain subject, and the numbers show the mindset. At the end of the study, most of the group may believe in the inevitability of a certain outcome. This does not mean the outcome is more likely—it simply means the members believe it to be more likely. While this data is subjective, it reflects the thoughts of a group, which may lead organizations to act a certain way.

It is also common to use subjective probability to determine outcomes where there isn’t enough data for a normal decision. When faced with a series of options and no additional information, a person will subconsciously calculate the various outcomes of different actions. She will then make a decision based on a ‘gut-feeling’ or hunch; in essence, she makes a decision based on subjective probability.