Why are probability and possibility confused with each other? Understanding the difference between the two is the key to rational decision-making, risk management, and avoiding major disappointments. What is the difference? Possibility means that an event can happen. It does not violate the laws of physics or logic. Its chance is greater than zero. Probability measures the mathematical or statistical likelihood that an event will actually happen under certain conditions. The chance is expressed as a percentage and is often extremely close to zero. Simple real-life examples The Lottery Ticket You buy a ticket from the National Lottery. Possibility: Yes, you have a valid ticket, so it is possible to win the jackpot. Probability: The chance of winning the jackpot is about 1 in a few million. Although the possibility exists, the probability is negligible. If you rely on this income for your retirement, your strategy is disastrous. Starting a New Business You decide to start a tech inn...
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