Tag: psychology

The risk of terrorism

As an example of the irrational — or, at least, inconsistent — way our minds process risks with small likelihood, Andrew Sullivan has collected a few comments from around the web on the risk of being killed in a terror attack. When I am worrying about the risk of a bomb on a flight that I’m going on, I sometimes consider the following: There hasn’t been a bomb in a plane for a while. Suppose I knew that today someone had planted a bomb on a US commercial flight. Well, then I’d be thankful that I had been warned, and I’d have to be CRAZY to get on a plane that day.

But here’s the thing: there are nearly 30,000 commercial flights every day, so if I did take the flight, it would increase my risk of dying (assuming all onboard would be killed by the bomb, and ignoring other air-travel-associated risks, as well as the fact that being on the plane will protect me from other risks; I definitely won’t be hit by a bus while I’m flying) by about 0.0033%. Now, in a typical year a typical American has about a .039% chance of dying in an accident (ignoring other causes of death). So that insane decision to fly when you know there is a bomb on a plane somewhere in the US exposes you to about the same risk of dying a horrible sudden death as about a month of ordinary life. And if you knew only that there were a bomb on a flight somewhere in the world, the risk to you would be about the same as about 10 days of ordinary life.

Does this change the way we feel about the risk? Should it? It sort of works for me, but then, my fear was never very great, and my faith in numbers is exceptionally high…

Daniel Kahneman, Social Psychology, and Finance

I’ve been a booster of the Tversky-Kahneman cognitive-bias revolution since I read their article in Scientific American as a high school student. (To be honest, I’d always lazily thought of it as Tversky’s work, but Daniel Kahneman has had the good sense not to die prematurely, and to collect a Nobel memorial prize.) And I’ve greatly enjoyed Kahneman’s new popular book on his collected lessons from many decades of research on cognitive biases.

Putting that together with my longstanding contempt for the finance profession (expressed at greatest length here, but more generally listed here), I was particularly delighted to start in on the chapter titled “The Illusion of Validity”, where Kahneman lays into the self-serving illusions of finance professionals. It turns out, though, that this chapter is an intellectual trainwreck, with oversimplifications piling up on crude distortions, while the whistle of self-satisfied self-promotion shrills incessantly in the background. It’s both insufferable and so poorly reasoned that it begins to call the reliability of the rest of the book into question. Kahneman doesn’t claim to be free of the cognitive biases he analyses in others, but you might expect more self-awareness.

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