While presenting at the Boston Museum of Science to about 200 museum-goers, I was able to run a modest experiment. Its purpose was to show that, contrary to some reports, people often show remarkable ability to deal with numbers and abstractions. In this case the experiment dealt with pricing, a subject people handle with remarkable deftness and ability. If, I reasoned, people can make remarkable sense of prices, perhaps they could do the same with probability.

On a table before the crowd were placed three bottles of a soda, unfamiliar to anyone in the room. The beverage was Goya “coconut soda” and I asked if anyone had ever purchased one. No one said they had, and considering how many shops I had visited in order to find a sufficiently obscure product, I believed them.

Each bottle bore a price tag a power of ten removed from the next. One said $9.00. Another said $0.90. The third said $0.09.

Pointing to this display, I asked the crowd what the true price was. I asked for a show of hands and one person selected $9.00, arguing that it was “imported.” When I asked about $0.09, one person selected that, tongue in cheek. The rest of the group selected the correct price of $0.90. And so would you and almost anyone you know. Indeed this is not really all that challenging a test, but then, that is my point.

Shown a novel object with some relatedness to things one knows or cares about, one can quite often guess its price within an order of magnitude. Why, if my assertion is correct, are people so good at this? Well, they are shown prices all the time, in shops, in the papers, on the Web or television. They buy things all the time and have a vast set of prices they can compare things to. They care about prices and the objects they attach to. Furthermore, they distribute their spending in a way which assigns relative value to different objects, and this assignment is embedded in the market prices of things and their relative claim on our spending.

This remarkable gift of calibration of prices is not static but adjusts, without our awareness of it, throughout our lives. Technologies and products change. Fashions change. The relative buying power of our currency changes. Despite all these changes we are rarely fooled. We can tell a true price when we see one, or we know how to find it.

I asked one older fellow in the crowd if he remembered what a slice of pizza and a Coke cost when he was a kid and he replied instantly, 25 cents. We even carry a sense of past prices in our internal calibrational system. How incredible this calibrational ability is!

Now imagine if we had information about all the things we risk, what we fear and hope for, what we worry about, and those happenstances which may occur to any of us at any time. What if they were all presented in the same currency, so to speak—a common format so each could be compared to each. Wouldn’t we do the same thing we do with pricing? Wouldn’t we pay close attention to those odds which concern us and learn to calibrate them by comparing them to others we care about?

This is what we mean by calibration. And whether you know it or not, you are marvelous at it.

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