Risk assessment requires accurate information to be accurate

I twisted my ankle while hiking recently. The pain was unpleasant, and I was annoyed by the time below from physical exercise.

I could guess from this experience that my hiking boots were inadequate. If I had made this assumption, I would have bought a new, high quality pair of hiking boots. One result would be a reduced chance of twisting my ankles and thus, suffering pain and downtime from exercise. This result, standing alone, will definitely be beneficial.

But of course the decision to buy better, more expensive hiking boots for me, could be the result of an addition to this beneficial one. The most notable of these other results was that I had less money to invest or spend on options other than the new hiking boots. I can’t specify what this kind of sacrifice might look like – a slight reduction in my savings, perhaps, or restoring my wine collection with less delicious vintage. Whatever the negative aspects of buying my new hiking boots, I chose not to fall victim to this negative experience even though I was fully aware that newer and better hiking boots would reduce the chances of my ankle twisting.

Is my inaction on the hiking-boot front unreasonable? If my only goal in life is to avoid twisting my ankles, the answer would be yes. If there were no other goals like big savings or enjoying fine wine, I wouldn’t leave anything out by buying new and improved hiking boots. But since I have countless goals in addition to reducing the chances of my ankle twisting, my decision not to buy more protective hiking boots is perfectly reasonable.

If I keep twisting my ankles in future hiking, I will really buy new and better boots. The reason is that the increased frequency of injuries tells me what a single hit does not do: my hiking boots probably Is I am willing to tolerate and thus, more inadequate than they should be replaced.

None of the personal stories above are startling. I’m sure the essential features of this dull account of my decision making regarding hiking boots apply to the routine decisions you make. You should not, for example, stumble upon a staircase on your front porch and conclude that the stairs are too steep and, thus, should be replaced. You don’t stop eating at your favorite restaurant because you’ve faced a frustrating meal there. You don’t usually change the route you take to drive to work because one morning on your trip you fall into a single fender-bender – or even more serious debris.

In our personal, daily lives we realize that accidents happen. Any special accident or mishap you have must prove that you are doing the wrong thing. In other words, every adult understands – if only subconsciously – that every possible step carries some risk. Therefore, the actual manifestation of a course of action risk is not in itself proof that the risk has been underestimated or that the warning against the risk was inadequate.

Yet this mature perception of the incompetence of risk and the meaning of accidents and sometimes misfortune seems to be missing in the public sector. Often, a newsworthy catastrophe is taken as evidence that warnings against such catastrophes must be strengthened.

Was there a recent mass shooting? So we need to tighten our restrictions on gun ownership!

Were Americans’ access to imported medical supplies blocked? We therefore need to rely less on foreign production of these supplies!

Was there a fatal accident on an amusement park ride? So we need to increase the safety of amusement-park rides!

Have the insiders of a large corporation cheated? So we must strengthen government oversight and control of corporate-manager behavior!

Was anyone caught with a gun through airport security? So we need to increase the rigor of security screening at airports!

Has anyone recently died of food poisoning from canned vegetables bought at the supermarket? So we need to control food security more strictly!

Every incident of this is tragic. But none of them, standing alone, does not mean that we “must do something.” Briefly banning the activity in question altogether, each level of caution about that activity leaves some chance that engaging in that activity will result in an accident, even a catastrophe. For example, even the most stringent and strictly enforced food safety regulations will not eliminate the possibility of someone dying from food poisoning compressed from store-bought food. It follows that if the government responds to a new case of severe food poisoning by tightening food security controls, the result could be controls that are too limited.

Of course, if reducing the likelihood of food poisoning is the only goal of humanity, then every increase in the rigor of food-safety control will be fruitful. But since we have countless goals other than avoiding human food poisoning, the steps we take to avoid such poisoning are costly. With every step we take, we deny ourselves other valuable products, services and experiences. At some point, then, an extra dolph – what economists call a “marginal increase” – is no longer food security. The (very real) benefits that we get from additional protection from food poisoning are less than the (very real) benefits we get from other products, services and experiences that we have to give up to get this extra dolph of protection from food poisoning.

Unfortunately, politicians tend to react to recent headlines. Responding in this way is a cheap and glamorous way to create the look of being caring and responsive. And reporters and headline writers tend to cover the news of recent tragedies and even exaggerate. Often, in response, governments take steps to implement or strengthen protections against what is happening in today’s headlines. The most frequent result is excessive protection against particular risks.

While a series of specific misfortunes may accurately express a desire to be more cautious against that misfortune, in almost all cases a single or rare misfortune – a misfortune that occurs only once or comparatively rarely – does not indicate that one should be careful standing alone. . Intensification In our personal lives, each of us has a strong motivation to make these assessments correctly, because if we do not do so, we are personally harmed. In contrast, politicians and bureaucrats are not only harmed personally by taking extra precautions, they are often praised for doing so – which is another good reason to downplay the role of government.

Donald J. Boudrox

Donald J.  Boudrox

Donald J. Boudroux is a Senior Fellow at the American Institute for Economic Research and with the FA Hayek Program for Advanced Study in Philosophy, Politics and Economics at George Mason University’s Markatas Center; A Mercatus Center board member; And Professor of Economics and former chair of the Department of Economics at George Mason University. He is the author of books The Essential Hayek, Globalization, Hypocritical and half-wittedAnd his articles appear in such publications The Wall Street Journal, The New York Times, U.S. News & World Report As well as numerous scholarly journals. He writes a blog called Cafe Hayek and writes regular columns on economics Pittsburgh Tribune-Review. Boudreaux holds a PhD in economics from the University of Auburn and a law degree from the University of Virginia.

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