On risk and decision making

In a complex world, understanding risk and responding to it properly is an essential human skill. Every kind of important decision involves it: from making choices about where to get electrical power to deciding whether to walk home through a dark city or let your children use the internet.

The manipulation of risk-related thinking is an increasingly obvious trend, with two major facets. The first is manipulation of the data upon which people base their decisions. The media, for instance, grossly exaggerates many risks. Rare phenomena, by definition, are news. Things that happen all the time (car crashes, domestic abuse) are not. As such, we worry about serial killers and terrorist attacks, when there is a vanishingly small chance either will ever harm us. Even worse, some campaigns actively deceive so as to try and achieve political ends; one particularly harmful example is education systems that misrepresent the effectiveness of contraceptives in hopes of encouraging teenagers to refrain from sex. Such campaigns are both unacceptably patronizing and quite obviously harmful. Another obvious example is the cultivation and exploitation of fear, on the part of governments, as a mechanism for securing increased power and freedom from oversight and criticism.

Such campaigns blend into the second trend: a denial that risk-related decisions must be made at the level of individuals. A natural trend of those in charge is to strip people of their ability to choose, for any of a number of reasons. There are times at which it is reasonable to force people to take certain precautions. Requiring people to have car insurance is a good example. Such cases, however, must be evaluated through public legal and political scrutiny, and justified on the basis of arguments that are critiqued and data that are legitimate and verified.

The intelligent solution is to teach good risk-related thinking. That means learning how to identify the agendas of those providing information. It means having tools to make reasonable assessments of logical arguments, as well as supporting data. That means not keeping people ignorant or keeping essential information secret. And it means teaching a perspective of individual empowerment, where the reality of trade-offs between different risks is acknowledged. Alas, it seems unlikely that such an approach is likely to be widely adopted.

Author: Milan

In the spring of 2005, I graduated from the University of British Columbia with a degree in International Relations and a general focus in the area of environmental politics. In the fall of 2005, I began reading for an M.Phil in IR at Wadham College, Oxford. Outside school, I am very interested in photography, writing, and the outdoors. I am writing this blog to keep in touch with friends and family around the world, provide a more personal view of graduate student life in Oxford, and pass on some lessons I've learned here.

6 thoughts on “On risk and decision making”

  1. Penn and Teller can be funny and effective at times. At other times, they take positions on the basis of pretty questionable thinking.

    Of course, exposure to exactly such arguments is good training for thinking through such issues yourself.

  2. I wanted to alert you to a new report from Ceres that examines the insurance industry’s response to global warming.
    As the world’s largest industry, with core competencies in risk management and finance, the insurance industry is well positioned to be part of the solution to climate change.

    The report, authored by IPCC scientist Evan Mills of the Lawrence Berkeley National Laboratory, finds that insurers worldwide are now offering hundreds of initiatives to tackle climate change and rising weather losses. The number of initiatives identified, which include pay-as-you-drive auto insurance, green buildings insurance, and weather derivatives for renewable energy projects, has more than doubled since a similar report was released last year.

    However, the report also highlights the fact that two-thirds of insurers are not yet experimenting with these approaches.

    The report is available for download at

  3. Even worse: after someone reports a “terrorist threat,” the whole system is biased towards escalation and cover-your-ass (CYA) instead of a more realistic threat assessment.

    Watch how it happens. Someone sees something, so he says something. The person he says it to — a policeman, a security guard, a flight attendant — now faces a choice: ignore or escalate. Even though he may believe that it’s a false alarm, it’s not in his best interests to dismiss the threat. If he’s wrong, it’ll cost him his career. But if he escalates, he’ll be praised for “doing his job” and the cost will be borne by others. So he escalates. And the person he escalates to also escalates, in a series of CYA decisions. And before we’re done, innocent people have been arrested, airports have been evacuated, and hundreds of police hours have been wasted.

Leave a Reply

Your email address will not be published. Required fields are marked *