Base Rate
Base rate is the background frequency of an outcome before considering new evidence, often used as a starting prior.
Definition
Base rate is the typical frequency of an outcome in the relevant reference class. It is often the best starting point for a prior probability before you incorporate specific evidence.
Why it matters
Base rates prevent dramatic overreactions to single data points. Many forecasting mistakes come from ignoring base rates and jumping straight to confident numbers.
How it connects
• Base rate informs prior probability.
• New evidence is incorporated via Bayes theorem and likelihood ratio.
Common pitfalls
Base rate neglect: Treating a vivid story as more informative than the background frequency.
Wrong reference class: Using the wrong baseline leads to bad priors.