Monday, October 04, 2010

Terror Alerts on Europe

I was giving some lectures in the last week or so on Judgment and Heuristics, and devoted a lot of time to the availability heuristic and salience. It is worth thinking about this in the context of terror alerts about potential Mumbai-style attacks in Europe. I am going to give the people who issue these types of alerts the benefit of the doubt and assume that there is a good reason for doing them e.g. to allow people to make their own choice, to raise general alertness about threats to aid prevention and so on (William Easterly is less willing to give the benefit of the doubt). But it does raise the strong possibility that people will start worrying about things that will affect them with very low probabilities and over which they do not have much control. Furthermore, there is a huge imbalance in the airtime devoted to making people afraid of things compared to the airtime devoted to getting people to set things in their proper context e.g. there are terrorist threats in operation in Europe but you are far more likely statistically to be killed in a car accident.

Given the probabilities involved for any individual in dying in a terrorist attack while travelling to Continental Europe, my response to the class was that if they intended cancelling an upcoming trip to France or Germany then I suggested that we lock the doors and I will call up for supplies and we will barracade ourselves in the lecture theatre because the relative safety of staying there for the rest of the term compared to braving the roads home everyday is far greater than the relative safety of staying in Ireland for a few days compared to taking your trip. It is easier to imagine dying in a terrorist attack than dying in a car crash and it occupies more of our mind when we are recalling risk. It is not at all inconsistent to feel moral outrage about terrorist attacks and seek that they be prevented and/or the perpetrators pursued. It is inconsistent with a rational worldview to overestimate your exposure to risk and to allow this to influence your decisions. Part of living in the modern world is overcoming fears of salient but low probability and non-catastrophic risk and getting on with life and making decisions based on more core values. Given the huge asymmetric costs faced by public officials from not revealing information about risk, it may ultimately have to be up to us as individuals to learn how to filter out things that lead to wrong decisions and a life based on fear.


Peter Carney said...

I recently heard the expression "trading in fear" applied to a well known Irish economist. I thought it was slightly unfair when applied to him but it certainly applies to some and indeed when you think about it many people make their living huckstering fear to the ignorant.

I've no idea what American policy is trying to accomplish with these announcement but i imagine such news isn't bad for business in the dwindling Florida or Michigan resorts. Cynicism aside there was one argument extended along the lines that such announcement would 'wrong foot' the budding terrorist - i.e., we know what your planning..

On the main point however, one caveat I have with your argument is that it is illogical to reassure people. The distinction between risk and uncertainty shouldn't be overlooked. we can calculate the probability of car accidents cause we have precedent and frequency. Terror attacks on the other hand cannot be reliably predicted - i.e., must have a large standard error. In this sense its spurious to suggest a low-probability when in reality the probability is unknown, or cannot be reliably estimated.

Liam Delaney said...

I have heard the argument made about some economists in Ireland. As you acknowledge, it is absolutely incorrect when made about most of them. People warning about the massive losses we are incurring by bailing out insolvent banks are pointing to a very important event that will occur with very high probability and cost every single one of us a lot of money and perhaps even a big chunk of our national sovereignty.

I agree with you on restraining all cynicism when it comes to why these announcements are made. These guys are operating in very changing and complex environments and risk enormous reputational consequences if they fail to flag something that is about to happen. The same is the case with people charged with protecting public health against viruses and toxins. It is a tough job and difficult to know where to draw the line. But as individual punters, we have to try to block out some of this stuff or life will be a series of anxious episodes.