Thursday, June 8, 2017

The emotional tail wagging the rational dog - IV

 Our perception of risk is dominated by the emotional part of our brain.  Threats that bring to mind strong images or which are related to us in vivid stories have more influence on our decision making than we imagine. Theories, graphs,  diagrams and data speak to the rational part of our brain but do not spur us to action. Paul Slovic, an expert on the social amplification of risk identifies two drivers of risk perception: 1)a sense of powerlessness and 2) an anxiety that comes from new and unforeseeable dangers. Terrorism involves both criteria. Economists appeal to the rational rider but the emotional elephant often has its way.

In Thinking, Fast and Slow, Daniel Kahneman writes about the time when he had gone to Israel when there were frequent incidents of suicide bombings in buses. Even then, the probability that any particular person will die in a terrorist incident is small but that is not how the public used to react. They used to avoid buses as much as they could and when in buses they used to look anxiously at packages or bulky clothes. Kahneman was ashamed to find that despite knowing the probabilities, his behaviour had also been affected. He found that he did not like to stop his car next to a bus at red lights and he moved away more quickly than usual when the light changed. His rational knowledge had no effect on his behaviour. He writes:
The emotion is not only disproportionate to probability, it is also insensitive to the exact level of probability. Suppose that two cities have been warned about the presence of suicide bombers. Residents of one city are told that two bombers are ready to strike. Residents of another city are told of a single bomber. Their risk is lower by half, but do they feel much safer?
Kahneman gives an example where some Americans were offered insurance against their own death in a terrorist attack while on a trip to Europe, while another group were offered insurance that would cover death of any kind on the trip. Even though "death of any kind" includes "death in a terrorist attack", the former group were willing to pay more than the latter. If you imagine a Venn diagram, the subset here is being valued more than the super set. Fear of terrorism for these subjects was stronger than a general fear of dying on a foreign trip. Kahneman suggests that the attribute of fear is being substituted for a calculation of the total risks of travel.

In 2014, the year for  which I heard the data, more people died in the US of gun related violence than in terrorist attacks worldwide. In India, the number of people who die in terrorist attacks is minuscule compared to the number of people who die in road accidents. Yet, people in both counties are more concerned about terrorist attacks. People are more afraid of flying than driving although people are far more likely to die in road accidents.

This anomaly has to do with the availability heuristic which has to do with what people instinctively do when they estimate the frequency of a category. If people can quickly recall instances of a category, that category will be judged to be large. Dramatic events like plane crashes and terrorist attacks are shown again and again on TV making us feel that they occur more frequently than they actually do.

The idea of availability helps explain how people react to various disasters. In the immediate aftermath of a disaster, people will be very concerned and buy various insurance policies and take various preventive and mitigation measures. But as memories of the disaster grow dim over time, the worry and diligence shown earlier melt away. In fact, this cycle of problem, concern and growing complacency seems to happen every year in India regarding monsoons.

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