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Fear Itself

A one-in-a-million risk may not be imaginary, but it's pretty damned close to it.

Do we pay too much to avoid minuscule risks? Yes, according to a new study by Office of Information and Regulatory Affairs (OIRA) administrator Cass Sunstein and Harvard University economist Richard Zeckhauser. The study, “Overreaction to Fearsome Risks,” published recently in the journal Environmental and Resource Economics, finds that “in the face of a low-probability fearsome risk, people often exaggerate the benefits of preventive, risk-reducing, or ameliorative measures.” Consequently, the researchers find that “in both personal life and politics, the result is damaging overreactions to risks.”

Translation: Scared people who don’t understand or care about parsing probabilities end up spending far more than is rational to avoid truly tiny risks. Worse yet, policy makers are often stampeded by frightened constituents into enacting regulations that cost far more than the benefits they offer in risk reduction.

Sunstein and Zeckhauser note, “Overreaction to risk is frequently found in the environmental realm.” As an example of overreaction they point to the Three Mile Island (TMI) nuclear meltdown in 1979. The Kemeny Commission report concluded that “the radiation doses received by the general population as a result of exposure to the radioactivity released during the accident were so small that there will be no detectable additional cases of cancer, developmental abnormalities, or genetic ill-health as a consequence of the accident at TMI.” Sunstein and Zeckhauser suggest that the country overreacted after the meltdown when construction of new nuclear plants stopped in the United States for 30 years. One consequence of the de facto nuclear power moratorium is that the coal-fired plants built instead caused many more health problems than new nuclear plants likely would have.

To illustrate how bad people are at understanding minuscule risks, the two researchers conducted an experiment with Harvard and University of Chicago law students who were asked what they would be willing to pay to avoid a one-in-a-million cancer risk. They could check off $0, $25, $50, $100, $200, $400, and $800 or more. One set of students was merely asked the question while another was given a highly emotional description of how gruesome cancer can be and then asked. The unemotional group averaged about $60 to avoid a one-in-a-million risk of cancer, while the emotional group averaged $210, nearly four times more.

Sunstein and Zeckhauser find “many people will focus, much of the time, on the emotionally perceived severity of the outcome, rather than on its likelihood.” They add, “With respect to risks of injury or harm, vivid images and concrete pictures of disaster can ‘crowd out’ the cognitive activity required to conclude and consider the fact that the probability of disaster is really small.” Activating the emotional centers in the amygdala shuts down the operation of the executive functions of the pre-frontal cortex.

Taking advantage of this flaw in reasoning, the researchers observe, “In this light, it should not be surprising that our public figures and our cause advocates often describe tragic outcomes. Rarely do we hear them quote probabilities.” In other words, politicians and activists deploy sob stories to scare the public into demanding regulations on activities they dislike. Indeed, as Sunstein and Zeckhauser explain, policymakers and activists have a bias toward action in such situations when they think they can obtain credit for responding to the risk. They want to seem like heroes to the public.

“If we look across dozens of cases, we can observe a pattern in which salient but extremely low probability risks are sometimes met with excessive responses,” write Sunstein and Zeckhauser. While not reaching any conclusions about what the government should have done or not done, the two do note that this overreaction dynamic has played out in many recent regulatory episodes, including the Love Canal contamination and evacuation incident (which led to a federal Superfund waste site clean up program), the ripening agent Alar (which was banned), shark attacks (Florida passed legislation prohibiting feeding them), terrorism (screening mail for anthrax), and terrorism (Iraq war).

So how much should someone pay to avoid a one-in-a-million risk? A “micromort” is defined as a one-in-a-million risk of dying. Let’s look at cancer. First, keep in mind that Americans have a high probability of contracting cancer. For example, an American man has a 44 percent lifetime risk of developing cancer and a 23 percent risk of dying of it. An American woman’s lifetime risk of contracting cancer is 38 percent and her risk of dying of it is 20 percent.

According to Carnegie Mellon University’s Death Risk Rankings, Americans’ average risk of dying in the next year is 8,931 micromorts. That is, out of 1,000,000 Americans alive today, 991,069 will be alive next year. With regard to cancer, Americans face an annual risk of 2,075 micromorts, which means out of 1,000,000, some 997,025 will not have died of cancer in the next year. So what does a reduction of a one-in-a-million risk of cancer amount to? Instead of 997,025 people not dying of cancer in the next year, 997,026 will not have died of cancer.

Another way to think about how much one might want to pay for avoiding a one-in-a-million risk is to make a rough calculation based on the Environmental Protection Agency’s new $9.1 million valuation of a statistical life. Since the agency uses a regulatory standard of a one-in-a-million risk, this means that its actuaries calculate that someone would be willing to spend about $9 to avoid such a risk. Now compare this amount to the 2000 study [download PDF] by Kip Viscusi and James Hamilton, Calculating Risks: The Spatial and Political Dimensions of Hazardous Waste Policy, which found that the average cost per cancer case avoided at most EPA Superfund sites was more than $100 million. And when you look at the median cost per cancer case avoided in the Viscusi and Hamilton study, Superfund looks even worse—that cost was $388 million. Assuming that Viscusi and Hamilton are right, $100 million is clearly an overreaction when even law students who were spooked by a gruesome description of cancer were willing to pay only $210 to avoid a one-in-a-million risk of cancer.*

Ultimately, Sunstein and Zeckhauser suggest that institutional safeguards are the best way to insure against the harmful consequences of public overreaction. They maintain that requiring benefit-cost analysis combined with careful attention to the relevant probabilities “should provide a check on regulations that deviate substantially from objective evidence.” And who will wield benefit-cost analysis as a weapon against public overreaction? Wise bureaucrats, of course. The Office of Information and Regulatory Affairs, they note, “monitors agency action to ensure that it is directed against genuinely significant problems.” And who is in charge of OIRA? None other than the wisest of bureaucrats, Cass Sunstein.

Perhaps Sunstein will be able to prevent future regulatory overreaction, but the history as detailed in this study does not provide much confidence that he will succeed.

“If people show unusually strong reactions to low-probability catastrophes, a democratic government is likely to act accordingly,” note Sunstein and Zeckhauser. Indeed. And the tendency to overreact is exacerbated when those demanding action are not the ones paying directly for it. In addition, politicians have little incentive to quell public fears. Satirist H.L. Mencken memorably summarized this democratic dynamic: “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” Maybe a one-in-a-million risk is not imaginary, but it's pretty damned close to it.

*Addendum/Correction: Bjorn Lomborg notes that the $100 million average cost for a Superfund cleanup is for a cancer case avoided, and the $210 the frightened law students say they would spend to avoid a 1-millionth risk of cancer would sum up to $210 million for an entire case avoided. This would suggest that the amount EPA is spending on Superfund clean up is in the ballpark for people who are very scared by the prospect of contracting cancer. On the other hand, the EPA's $9 million valuation for a statistical life is based, among other things, at looking at the risk premium that people actually demand for dangerous jobs. And keep in mind that the law students are not actually spending any money in the experiment. My thanks to Lomborg for his note.

Science Correspondent Ronald Bailey is author of Liberation Biology: The Scientific and Moral Case for the Biotech Revolution (Prometheus Books).

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  • ||

    Do we pay too much to avoid minuscule risks?

    You tell me, Mr. "Monthly Global Temperature Anomaly".

  • ||

    WIN!

  • ||

    I was wondering how many comments i would have to go through before i saw one about climate change. I guessed 3, i was wayyyyyyyy off

  • ||

    Beautiful!

  • ||

    I'm not afraid of anything excepy ex-wives and alligators. Oh yeah.... and lawyers, politicians, clowns and, and..........

  • ||

    A kid and a clown are walking in a forest at night.

    The kid says "I'm scared."

    The clown says "You're scared?! I'm the one who's got to walk home alone!"

    / old joke

  • ||

    Ha!

  • ||

    I'd forgotten what I did with that kid...

  • T||

    I have a project at another facility current in the throes of schedule meltdown, because some jackass at corporate found out it was using hydrogen gas. OMG! We'll blow up the plant! Hindenburg V2.0! We'll be in the papers negatively! Abort! Abort! Abort!

    I'm getting a 4 inch natural gas line put in at this facility and having the pressure bumped up to possibly 40 psi. Nobody blinks about this project, and I'm getting bitched at to make it happen faster.

    Which is more dangerous if something goes wrong? A 6-pack of bottled hydrogen or a 4 inch gas line at 40 psi?

    People, in general, suck at evaluating risk and are distracted by the horrible. It's a failing that annoys me no end.

  • rather||

    Which is more dangerous if something goes wrong? A 6-pack of bottled hydrogen or a 4 inch gas line at 40 psi?

    The one with the libertarian who is distracted by reading H&R! ;-)

  • ||

    EOM

  • rather||

    on the emotionally perceived severity of the outcome, rather than on its likelihood.

    OK, we all know that a lot of warnings lean toward the autoschediastic but I see it as a balance to the yang of the perpetually unprepared.

    Government assuredness is equally disquieting. The average person wants to hear the government position but researches for further opinion. I noticed my blog receives a lot of hits from Japan reflecting this need to balance opinion

    Hmm, why did you use the typical hysterical woman for the photo? The internet is full of boys panicking too

  • ||

    Because, in popular culture, the unrealistic person crying in the corner for it all to go away is female. The unrealistic males aren't crying, they're just acting stupid.

  • ||

    Sure your blog gets lots of hits from Japan, rectal. Sure it does.

  • rather||

    I was picked up by a japanese writer who blogged my headline:
    Why Did The Japanese Not Riot Or Loot After The Tsunami? Because They Don’t Know How.

    I guess their sense of humor is intact

  • ||

    Too bad your understanding of the word "autoschediastic" isn't intact. But then, it's you, so what would one expect?

  • Yen Lo||

    Epi, you are an idiot

  • Yen Lo||

    was that simple enough for you?

  • No?||

    epi dumb dumb

  • ||

    Why Did The Japanese Not Riot Or Loot After The Tsunami? Because They Don’t Know How.

    Science H Logic you are an imbecile. Any idea what the average age is in Japan? Any idea what the average age of a looter is? Can't subtract? They didn't loot because they are a geriatric society, not because they "don't know how". Again, Science H Logic you are stupid.

    Seriously, I will pay for a rope if you promise to hang yourself with it.

  • rather ||

    Marshall, you disappoint me. I never took you for one of the stupid boys

  • ||

    Considering the source, I take this as a high compliment.

  • ||

    "She lives in Canada -- met her at Niagara Falls. You wouldn't know her."

  • Old Mexican||

    Re: rather,

    OK, we all know that a lot of warnings lean toward the autoschediastic but I see it as a balance to the yang of the perpetually unprepared.


    "The ultimate result of shielding men from the effects of folly is to fill the world with fools."

  • rather||

    expensive fools too. I wonder how many libertarians don't carry health or auto insurance? The cautious pick up their bill.

  • Old Mexican||

    Re: rather,

    expensive fools too.


    Especially if they feel they enjoy the protective hand of government... then they become very dead fools.

    I wonder how many libertarians don't carry health or auto insurance?


    I wonder how many statists believe their own government's assurances that "everything is just fine"?

  • rather ||

    How much does "everything is just fine" cost?

  • ||

    "...how many libertarians don't carry health or auto insurance? The cautious pick up their bill."

    What does being libertarian have to do with buying (or not) health or auto insurance? Insurance is a contract between willing parties to share risk. Well, except in some provinces of Canuckistan, where we are forced to pay health care "premiums" to the government and buy auto insurance from the sole government provider.
    It's not my problem that the government you clamor for agrees to or demands to be the health insurer or auto insurer of last resort. You voted for that. I didn't.

  • T||

    Also, "Activating the emotional centers in the amygdala shuts down the operation of the executive functions of the pre-frontal cortex."

    No shit. You can't be emotional and make rational decisions? There's a shock to anybody who's managed to reach adulthood.

  • ||

    I can think of 535 putative adults who would be surprised.

  • ||

    I mentioned something along these lines to Rather, above.

    I was just thinking the other day about how annoying the crying, unrealistic people are in movies. They seem to think that hiding or whining will make problems go away, instead of trying to deal with them.

    The unemotional people are usually the ones who survive the disaster/alien invasion/monster/etc., unless some deus ex machina swoops them away alive. That happens too often to be realistic.

  • ||

    What amuses me in horror/slasher picks is that the victims always run to some place where they are going to be trapped.

  • T||

    Yeah, the suckers always barricade themselves in a tiny little space with no weapons and only one access point. That'll end well.

  • ||

    From a Darwinist point of view, they *are* removing themselves from the gene pool...

  • Old Mexican||

    Re: Aresen,

    What amuses me in horror/slasher picks is that the victims always run to some place where they are going to be trapped.


    Or how the nice man with the machete travels in space, instantaneously, to be exactly behind his backwards-walking victim...

  • rather ||

    My favorite cliche is the Wilhelm Scream

  • Old Mexican||

    Oh, shit, rather - you almost made me visit your blog... but, I got back to my senses just in time.

  • rather ||

    Your loss

  • Old Mexican||

    Not unless you look like this:

    http://4.bp.blogspot.com/_EDFq.....me-156.jpg

  • rather ||

    She's cute but for her tramp stamp +.

  • ||

    Not unless you look like this

    OM, as much time as she spends on the internet is evidence that rectal doesn't look anywhere near that nice. Obviously, she is hideous which is why she has time to torture all of us with her complete inanities.

  • rather||

    never heard hideous but that is kind of hot!

    There was something animalistic in her breathing; he felt an urge for her but couldn't understand why.

    Why? he thought, feeling the words spill from his mouth

    He fucked her despite his aversion to her hideous ass*
    ...he knew why after; he had never felt like a man till her

    *(tribute to OM's stated preference)

  • rather||

    I need to fit that in my book

  • ||

    One more reason I don't watch them. But I did watch Alien not too long ago. I could practically write a dissertation on all the things the characters did wrong. I saw probably 75% or more of the things coming, just because the characters were acting stupidly.

    Now I want to write a *good* scifi-horror movie.

  • rather ||

    Alien was kick-ass

  • ||

    I'm just worried that some higher entity looking down on us is going to be tempted to click on a "natural disaster" tab and select one form a menu

  • ||

    ...crying, unrealistic people...

    You haven't met my wife.

  • Mrs DLM||

    No, you haven't fucked me.

  • ||

    You can't be emotional and make rational decisions? There's a shock to anybody who's managed to reach adulthood.

    Neuroscience would disagree. It seems that it is nearly impossible to be rational without input from your emotions. The emotionless decision is more likely to be incorrect largely due to a lack of perspective on the value of one outcome versus the other.

  • ||

    Government can play the fear card and people will run to it for protection. A jedi mind trick for getting the people to surrender their freedoms. It's been working well for authority.

  • Yen Lo||

    Like that works

  • ||

    I'm actually surprised Sustein would publish something that doesn't support a regulatory leviathan. Maybe he's starting to come around?

    Nah...probably not.

  • ||

    Watch the patterns, the fools are beginning to realize they've been duped, not just health and environment, but 'security' too. Where does it occur you ask? Follow the trends on "The Simpsons" or "South Park". Yeah, I like trash TV, but there are more and more episodes pointing out the insanity of the overreaction to fearful situations. I'd be willing to bet there are more.

  • ||

    My guess is that he is doing this work trying to discredit all the money being spent in the "War on Terror" while completely missing the fact that the theory works the same for "global warming."

  • ||

    If you read carefully, he did recommend a regulatory leviathan...just one that is there to "manage" the hysterical rantings of the misinformed public.

    Another one of the "having the right people in charge" studies.

  • ||

    "Do we pay too much to avoid minuscule risks?"

    Why do you think we have the seemingly annual rite of state legislatures passing new laws named after victims of crime?

    Megan's Law
    Jessica's Law
    Fill in the Blank Law

  • ||

    Aren't most of these people victims of things that were crimes already? Why would passing a new law help?

    Stupid legislators.

  • rather ||

    Yes, they were crimes already but loopholes let some of these bastards off the hook.

    Amber Alerts were brought about my an emotional reaction

  • ||

    "Amber Alerts were brought about my an emotional reaction."

    Thus proving that we can re-write all the laws to close ALL the loop-holes and completely eliminate all crime. Awesome.

  • ||

    Silly capitalist, we have to pass a law first before we can decide whether or not it works. And even if it doesn't, at least we can say we tried and trying is half the battle.

  • ||

    No, if it doesn't work then the law was either not strong enough or there was insufficient funding. That's the reason all laws don't quite work. It's never because the government shouldn't have passed it.

  • ||

    You know, I just suspect people in general are getting 'conditioned' to have no faith in their own judgment and encouraged to turn to 'experts' on everything. These experts have a vested interest in exaggerating the threat of whatever it is they are experts on.

  • ||

    The math in the middle of this article looks wrong to me. It treats getting cancer and dying of cancer as if they are the same thing. Increasingly, they are not.

  • ||

    No, the article specifically differentiates between developing cancer and dying from cancer. For American males, a lifetime (not annual, as in the "micromort" discussion) chance of developing it is 44%, while the lifetime chance of dying of it is 23%. For American females, the chances are 38% and 20%. Considerable differences there.

  • ||

    There's a paragraph that differentiates between the two. Then the next paragraph throws that away and discusses only the chances of dying of cancer.

    The people suveyed were asked how much they would spend to avoid a very small chance of contracting cancer, and Bailey answers the question of how much they should be willing to spend to avoid a very small chance of dying of cancer.

    In either case, it seems to me, from the choices given, the answer should be $0. It's closer to $0 if you're answering for 'contract' rather than 'die', however.

  • ||

    The people surveyed were asked about a "cancer risk"--we aren't told if the risk is contracting it, or dying of it. But I do see a problem with the figures, now that you mention it. It states a male has a 23% lifetime risk of dying of cancer. In the next paragraph, the figure is an annual risk of 2075 micromorts, which would be about a 0.2% annual risk of dying from cancer. To turn that into a lifetime figure, multiply by life expectancy to get something like a 15% lifetime risk. That's very simplistic, but it still shows a discrepancy. The figures in the first paragraph seem awfully high to me.

  • ||

    I agree, it very confusing. They talk about a one in a million risk and then stat a statistic like 44%. Theres a HUGE difference between 1 in a million and 44 out of one HUNDRED. They should have used a bad case that was something like being hit by lightning or getting run over by a bus that would have been realistically closer to a 1 in a million chance.

  • ||

    There is a 100% chance of dying for every individual in the world. What aren't we spending tons of money on this instead of wasting it on these very low probability risks?!

  • ||

    I have a secret "Not Dying" system that I will sell you for $100,000.

    If it doesn't work come see me for a full refund*. (I've never had a claim.)

    *(Warranty not assignable, must be claimed in person.)

  • ||

    According to my government professor, eventually everyone will have diabetes and cancer because corporations poison us with chemicals in our food and water. Oh, and our kids will have autism because we give them vaccinations made by pharmaceutical corporations. Clearly, then, the only solution is to give government greater regulatory authority over such matters so that we don't end up dead and we'll all be safe, healthy, and happy like the European social democracies.

    Yeah, there's no fear whatsoever in statist ideaology, they are motivated purely by science and reason.

  • ||

    I also hate how statists act like it is such a big deal that life expectancy is 3 years higher in other countries. Oh my god, I'm only going to live to be 78! Noooooo! I had so many plans for my 80th birthday.

  • ||

    In every country, the statists have some statistic whereby their country does less well than some other country, which is used as justification for further government intervention.

  • ||

    The problem with judging life expectancies when you're still young is that they'll change by the time you get there...

    I'm hoping for 250 or more. Not likely, but I can hope.

  • ||

    According to my government professor, eventually everyone will have diabetes and cancer because corporations poison us with chemicals in our food and water.

    If you define "poisoning" as "helping us to live longer", your professor has a miniscule point, since both diabetes and cancer become progressively more likely as one ages.

  • ||

    "Yeah, there's no fear whatsoever in statist ideaology, they are motivated purely by science and reason." Exactly right. In fact there is never science in the statist bullshit.

  • ||

    I just wanted to say thank you for linking to the original study and quoting the people who conducted it.

  • ||

    The study showed that after seeing gruesome pictures of cancer, people would spend an average of $210 to avoid a one-in-a-million risk. But, that's not the issue. The researchers should have asked, "How much should the government spend so you can avoid a one-in-a-million risk of cancer?" The result probably would have been hundreds of times greater. People might not choose to spend $50,000 of their own money for a tiny reduction of risk, but many of them will insist that the government should do so.

  • ||

    Excellent point, and quite true. However, the point of the study is whether people make rational assessments of risk and risk amelioration, and what role heightened emotions play in that calculation. Had the question been phrased differently--to wit, "How much should the government spend"--the difference between the two groups ostensibly would have been similar.

    Good point, all the same, and maybe worth an experiment to validate. Because, again, it is really the more important question.

  • ||

    Common politician reactions when unpleasant things happen:

    "When the health and safety of the public is at stake, no cost is too great to bear."

    "We must ensure that something like this NEVER happens again."

    Mencken was right.

  • ||

    Dr. T. & mgd: I did write: And the tendency to overreact is exacerbated when those demanding action are not the ones paying directly for it.

  • ||

    So you did. It would be interesting to see a study on that as well. It's rather intuitive that this would be the result.

  • ||

    The study showed that after seeing gruesome pictures of cancer, people would spend an average of $210 to avoid a one-in-a-million risk. But, that's not the issue. The researchers should have asked, "How much should the government spend so you can avoid a one-in-a-million risk of cancer?" The result probably would have been hundreds of times greater. People might not choose to spend $50,000 of their own money for a tiny reduction of risk, but many of them will insist that the government should do so.

    Exactly. For any individual to minimize risk, the determination must involve personal cost, whereas for government, it involves the creation of beauracracies and staff that are incentivized to exaggerate the risk so as to increase their budgets and increase their pay.

  • ||

    Sort of like letting government take 40 percent of your income to prevent the 1 percent chance of getting robbed?

  • ||

    Ron, why do you assume that the only reason to clean up Superfund cites is to mitigate cancer risks?

  • ||

    Yeah as an CEE i was put off by that assumption as well.

  • ||

    If you had gotten a degree in science instead of engineering you might know junk science when you see it.

  • ||

    Ron, it's also funny that you bang on Superfund, when in fact, the little risk that we blow trillions on is the War on Terrorism.

    But that is something you can't criticize, lest you force a divide with your bagger bedfellows.

  • ||

    this overreaction dynamic has played out in many recent regulatory episodes, including... terrorism (screening mail for anthrax), and terrorism (Iraq war).

    RTFA, Chad.

  • ||

    He specifically mentioned the War in Iraq as an example of over-reaction, Chadwagon.

  • ||

    Construction of new nuclear plants stopped in the United States not because ordinary people were afraid of them, but because the people that build and pay for them looked at the billion dollar plus damage to the reactor at TMI and decided they didn't want any part of that.

  • ||

    Finally, someone speaks the truth. And, in fact, any CEO of a utility who is not terrified about the risk to his company (not to the public) of a nuclear plant accident, does not undersand the technology very well, and does not value his company very much.

    That being said, if the CEO is still willing to take the risk, he can reap great rewards, if he insists on the absolutely highest levels of vigilence by the people who design, construct, operate, and maintain those facilities. The Japanese have shown that they (or, at least TEPCO) do not have the necessary safety culture to run nuclear power plants safely.

  • ||

    C'mon, if any culture can be said to have a safety culture, I would say that Japan has one.

    The accident at the nuclear plant in Japan was truly a 1 in a million kind of thing. An earthquake that is literally in the top 5 ever recorded as a magnitude, followed by a devistating 30 foot high tsunami.

    This case in fact is the reverse case in this article and proves the danger of the thinking they are talking about. In hindsight, how many billions would you spend to have prevented the nuclear accident in Japan from happening? Quite a lot right. Well, now how are you going to find all the money to spend on every reactor in the world so you can prevent an accident like this from ever happening again.

    Thats exactly what the article is talking about. The Japanese Nuclear plant represents the scary picture of cancer patients talked about in the article. It will be used to create unnecessary overspending on nuclear plant safety.....

  • ||

    Based on the fact that it actually happened, I would have say that the chances of an accident like that are a lot higher than 1 in a million.

    Japan is in one of the most geologically active zones on Earth, so planning for a 9.2 earthquake and resulting tsunami doesn't seem that unreasonable. And why did the plant have to be built where a 30 foot or even a 50 foot tsunami could reach it?

    In any case, my point was that the fact that no nuclear power plants are being built in the US is the result of a very rational decision based on the devastating financial impact of the TMI accident to the plant operator, and is not the result of irrational fears of cancer.

    Let's see how many new nuclear power plants are built in Japan after the true cost of the accident to the plant operator is totaled up.

  • ||

    Just a litle follow-up.

    Japan's government on Friday ordered the operator of a tsunami-damaged nuclear plant to pay about $12,000 to each of about 48,000 households forced to evacuate from the area, with more money to be payed later.

    That first little installment comes to around $576,000,000 US, and that's just the start of the financial toll for Tokyo Electric Power Co.

  • ||

    The Japanese WANT you to think that they have a good safety culture. They cultivate that image, but it is really not there, because they have a lot of other cultural issues that work against the safety culture. The best example is the deference that is given to seniors (i.e., members of management or senior staffers by junior members). It is not in their culture to tell their superiors bad news.

    I have actually visited Japanese nuclear power plants (I think I have actually been in one of the Fukushimi Daiich plants), and taken the tour route, which is quite impressive. But when you get off the tour route, you see what is behind it, and it is NOT pretty.

    Also, FYI, they "practice" their equipment inspections, on the actual equipment, so that when the "real" inspection is done, all will be perfect. That is not a good safety culture.

  • ||

    Why does the study focus on cancer risk as the sole benefit of the EPA Super Fund programs? The cost definitely seems unreasonable if cancer risk is the only factor considered, but don't other risks need to be evaluated as well? For instance, lead, arsenic, and mercury all can cause severe health problems that are not related to cancer.

  • ||

    What it really boils down to is everyones a pussy. In the end they'll all get what they have coming to them. Unfortunately, that means the rest of us have to pay the price for their pussiness too.

  • ||

    Excellent article - reposted through the Facebooks and the Tweeting. Thank you, Ronald!

  • ||

    More accurately, *linked* through the Fabhooks and the Tweeners.

  • ||

    The central idea here...that people are bad at valuing risk...is certainly sound. But there is more to consider than the probability...and probability calculations for rare events are less useful than those for frequent events. There is just as much danger of under-estimating the impact of rare events as there is of over-estimating their likelihood. When you start talking about policies to deal with these low-information environments...I am not sure the simple pocket-book calculations are going to lead you to the best policy.

    Would it have been worth it for Japan to have built sea walls that were high enough and strong enough to protect their coastline against the recent quake? They had walls that were designed to deal with the worst Tsunami ever recorded...but only just barely. The arrogance of predictive models is typically in their feigned precision for the consequences of rare events.

    Yadda yadda...read black swan...etc...

  • ||

    NM: But some people see themselves surrounded by flocks and flocks and flocks of black swans. If you're not going to use benefit-cost what are you going to use, worst-case? Is that really a sensible and affordable strategy?

  • ||

  • ||

    You will, of course, need to generalize to different policy areas...but the basic ideas are a good place to start.

  • ||

    NM: Nice link indeed, and I certainly agree with the notion that people with conflicts of interest should not be setting the rules -- but that's just the problem with regulations, public choice tells us that nearly everybody is "conflicted," activists, businesspeople, and wise regulators included. Anyone can gin up a "black swan" as a way to promote the policies they want.

    In any case, the point that Sunstein and Zeckhauser is making is that scared people overreact and make bad choices. This includes financial regulations like Dodd-Frank. Go here for my colleagues' analysis of the failures of Dodd-Frank.

  • ||

    Nice link. Thanks.

  • ||

    Competent regulators + understanding of behavior economics = libertarians worst nightmare

  • ||

    *behavioral

  • ||

    This seems like strange behavior from Cass Sunstein, unless he plans on cynically using it to "nudge" people into behavior he approves of.

  • ||

    What behavior might Sunstein be trying to "nudge"?

  • ||

    Why won't the government do something?
    I mean, think of the children!
    For gawd sake, won't somebody think of the children!

  • ||

    I TRIED TO-A DO THIS, BUT THE GOVEMINT CAME

    THE GOVEMINT CAME AND TOOK-A MAH BABEH

  • ||

    what the hell kind of an experiment is that? Of course I'd pay $800 to avoid a cancer risk, even one-in-a-=million. You don't have to be freggin McRiches Bucksaplenty for that.
    Though I guess it depends on how much lowER your subseqeunt risk is. If it goes down to zero in this hypothetical then I'd DEFINITELY pay it. But if it only goes down to one-half-in-a-million then maybe yeah I might not pay as much

  • ||

    The calculations in this post are misleading. Superfund cleanup works out to $100 million per cancer case avoided. Sunstein and Zeckhauser find a value of $210 million per life saved for the "emotional" group ($210 to avoid a 1 in 1 million risk of death). The comparison above is off by several orders of magnitude.

  • ||

    I'd be happy to pay for auto insurance, or pay to avoid cancer, just as I wear my seatbelt, but only if it was all voluntary. I don't need, want, or find it permissible for government to dictate to me what I will and will not do in these matters. Fucking ball-gobblers.

  • ||

    I don't get why the article didn't mention the biggest over-hyped fear of the past decade - terrorism!

    I once read that the av

  • ||

    I'm surprised the article didn't mention the most hyped fear of the past decade - terrorism.

    I think I once read that an American is 400 times more likely to die from cancer or a car accident than a terrorist attack. Yet, look how much money and human lives we spend fighting the War on Terror.

  • ||

    Well, there are terrorists fomenting terrorism, who should we go after for fomenting cancer?

    And we could always ban cars so as to avoid those deadly accidents...

  • قبلة الوداع||

    thank u

  • منتديات العراق||

  • قبلة الوداع||

    ThaNk U

  • goallen||

    ty rights, etc. seem like a more accurate measure of freedom than democracy.

  • kangzhu||

    This plan has no merit

  • دلعني||

    good man

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