survivorship bias
Definition
The tendency for failed companies to be excluded from performance studies due to the fact that they no longer exist. Survivorship bias causes the results of some studies to skew higher because only companies which were successful enough to survive until the end of the period are included. Similarly, mutual fund performance may be misleading due to survivorship bias if the fund family tends to merge or discontinue underperforming funds.
Use survivorship bias in a sentence
“ I did not like the survivorship bias because the companies that were closed still needed to be factored into the study. ”
“ You should try and make sure that you do not use survivorship bias when you are doing any studies on other past companies. ”
“ The survivorship bias affected the results of our study dramatically so this was a key footnote in our documentation presented. ”
