Risk Management

Seems like some current goings-on reflect our inability, either by nature or nurture, to rationally evaluate risk. Consider the reaction to a couple of recent shootings and the ongoing discussions on climate change in Paris.

In the first, the recent focus on mass shootings led the New York Times to collect angst-ridden quotes from readers that indicated everything from professors worried about a student angered over a grade killing them and students sitting close to exit doors to escape anticipated mass mayhem to folks fearful of attending sports events for fear of terrorists or gunmen. A quick look at statistics shows your odds of dying in such an attack (about one in a million per year for being killed in a mass shooting and a bit below that for death by terrorist attack per year this century) are well below those of dying in a car crash (1 in 10,000 per year). (For completeness, death by firearm is also about a 1 in 10,000 chance per year; 33,636 gun-related fatalities in 2013, 32,719 highway deaths). Allowing these very low risk events to dominate your life, causing you emotional distress and perhaps leading to government overreaction, is irrational.

Equally irrational is doing nothing about stuff that can have a huge impact.

We face a finite chance of profound changes in the environment with changes in atmospheric carbon dioxide. Increases in tropical diseases, crop stress, heat-related deaths, increased drought, rising sea level, etc., are things that can have profound impacts on people’s lives. Not just a few, not the few thousand unfortunates to fall to mass shootings or terrorist acts, but hundreds of millions. When you also factor in the costs to be carried by even larger groups, it would make a lot of sense to buy insurance to minimize the risks. We do this all the time with possible events like floods and fires. If we think there is a 10% chance that current carbon emissions will lead to hundreds of billions of dollars in economic damage in 50 years, you can argue that spending billions today is a good investment.  And if there is a one in one hundred or one in one thousand chance of continued emissions leading to global collapse of civilization, spending a few tens of billions today seem outright brilliant.  You don’t have to have absolute certainty in the forecasts, you just have to have a reasonable understanding of the probabilities.

And so this is the point.  We need as a society to better evaluate the real costs of risks and thus the effort that should be spent to minimize or eliminate those risks.  The point here is not to say that nothing should be done about mass shootings and everything about global warming, but that the effort and concern should be more proportional. So maybe we need to dial back the geometry in high schools and dial up probability and statistics. We need a population that can estimate an expectation and act upon it.

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