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A weathercaster on U.S. television once announced the weather this way: The probability that it will rain on Saturday is 50 percent. The chance that it will rain on Sunday is also 50 percent. Therefore, the probability that it will rain on the weekend is 100 percent.
Great Britain has many traditions, one of them being the contraceptive pill scare. Since the early 1960s, women are alarmed every couple of years by reports that the pill can lead to thrombosis, potentially life-threatening blood clots in the legs or lungs.
Just how big is 100 percent? The studies on which the warning was based had shown that of every seven thousand women who took the earlier, second-generation pill, about one had a thrombosis; and that this number increased to two among women who took third-generation pills. That is, the absolute risk increase was only one in seven thousand, whereas the relative risk increase was indeed 100 percent. As we see, in contrast to absolute risks, relative risks appear threateningly large and can cause a great stir.
Osama bin Laden once explained with relish how little money he used to cause such huge damages: “Al-Qaeda spent $500,000 on the event, while America, in the incident and its aftermath, lost—according to the lowest estimate—more than $500 billion, meaning that every dollar of al-Qaeda defeated a million dollars.”
Yet there is a simple rule of thumb that could have helped that professor: If reason conflicts with a strong emotion, don’t try to argue. Enlist a conflicting and stronger emotion. One such emotion that conflicts with dread-risk fear is parental concern.
How many miles would you have to drive by car until the risk of dying is the same as in a nonstop flight? I have asked this to dozens of expert audiences. The answers are all over the place: one thousand miles, ten thousand miles, driving three times around the world. However, the best estimate is twelve miles. Yes, only twelve. If your car makes it safely to the airport, the most dangerous part of your trip is likely already behind you.
Nothing will ever separate us. We will probably be married another ten years. Elizabeth Taylor, 1974, five days before she and Richard Burton announced their divorce
If we knew everything about the future with certainty, our lives would be drained of emotion. No surprise and pleasure, no joy or thrill—we knew it all along. The first kiss, the first proposal, the birth of a healthy child would be about as exciting as last year’s weather report.
When an astrologer calculates an expert horoscope for you and foretells that you will develop a serious illness and might even die at age forty-nine, will you tremble when the date approaches? Some 4 percent of Germans would; they believe that an expert horoscope is absolutely certain.
But when technology is involved, the illusion of certainty is amplified. Forty-four percent of people surveyed think that the result of a screening mammogram is certain. In fact, mammograms fail to detect about ten percent of cancers,
Humans appear to have a need for certainty, a motivation to hold on to something rather than to question it. People with a high need for certainty are more prone to stereotypes than others and are less inclined to remember information that contradicts their stereotypes.
Small children often need security blankets to soothe their fears. Yet for the mature adult, a high need for certainty can be a dangerous thing.
“Only fools, liars, and charlatans predict earthquakes,” said Charles Richter, namesake of the scale that measures their magnitude.
When making decisions, the two sets of mental tools are required: RISK: If risks are known, good decisions require logic and statistical thinking. UNCERTAINTY: If some risks are unknown, good decisions also require intuition and smart rules of thumb.
Originally, the word “risk” referred not just to dangers or harms but also to both good or bad fortunes in Fortuna’s hands: A risk can be a threat or a hope. I will retain the original use of the word. After all, without risk taking there would be little innovation.
The geese had collided with the engines. A jet engine can “ingest” smaller birds but not Canada geese weighing ten pounds or more. If the bird is too big, the engine shuts down rather than exploding. But this time the improbable event had happened: The geese had flown into not just one but both engines, and both were silenced.
A gut feeling is neither caprice nor a sixth sense, nor is it clairvoyance or God’s voice. It is a form of unconscious intelligence. To assume that intelligence is necessarily conscious and deliberate is a big error.
In the early days of HIV testing, twenty-two blood donors in Florida were notified that they had tested HIV-positive on the ELISA; seven of them committed suicide without knowing whether the results were true.18
For instance, David Viniar, chief financial officer of Goldman Sachs, reported that their risk models were taken totally by surprise by unexpected “twenty-five-sigma events” several days in a row, resulting in huge losses.
Banks are sometimes criticized for operating like casinos. If only that were true! As Mervyn King, the former governor of the Bank of England, noted, if they did, it would at least be possible to calculate the risk.
In 1876 Western Union, the largest American telegraph company, refused to buy Graham Bell’s patent for one hundred thousand dollars, arguing that people are not savvy enough to handle a phone: “Bell expects that the public will use his instrument without the aid of trained operators. Any telegraph engineer will at once see the fallacy of this plan. The public simply cannot be trusted to handle technical communications equipment.”
A group of British experts thought somewhat differently: “The telephone may be appropriate for our American cousins, but not here, because we have an adequate supply of messenger boys.”
Risk aversion is closely tied to the anxiety of making errors. If you work in the middle management of a company, your life probably revolves around the fear of doing something wrong and being blamed for it. Such a climate is not a good one for innovation, because originality requires taking risks and making errors along the way. No risks, no errors, no innovation.
Gestalt psychologists’ way to solve problems is to reformulate the question until the answer becomes clear.
As we have seen, experiencing a visual illusion means making a good error. Good errors are errors that need to be made. Children are known for these.
The spread of AIDS in Africa was dramatically underestimated by the World Health Organization (WHO), whose computer models assumed that the probability of infection increased with the number of sexual contacts, independent of the number of sexual partners. But ten contacts with one partner lead to a much lower chance of infection than one contact with ten different partners.
The Institute of Medicine estimated that some 44,000 to 98,000 patients are killed every year in U.S. hospitals by preventable medical errors.5 Note that these are only the documented cases.
A negative error culture leads to more errors and less safety, and little interest in effective safety measures. To quote the head of risk management of an international airline: “If we had the safety culture of a hospital, we would crash two planes a day.”
First, the hierarchical structure in hospitals is not fertile ground for checklists, which, as mentioned, might require a female nurse to remind a male surgeon to wash his hands. Second, the consequences affect both parties equally in aviation: If passengers die in a crash, pilots die as well, whereas if patients die, doctors’ lives are not endangered.
Many a committee meeting ends with “We need more data.” Everybody nods, breathing a sigh of relief, happy that the decision has been deferred. A week or so later, when the data are in, the group is no further ahead.
To play it safe, politicians decided that commercial planes could not fly for weeks, knowing that if a plane crashed when flying through the ash cloud, they would be held responsible. When people are killed because they have to take their car instead, the question of blame doesn’t even come up.
In Switzerland, the rate of hysterectomy in the general population is 16 percent, whereas among doctors’ wives and female doctors it is only 10 percent.13 In the United States, where fear of litigation is higher, about one out of every three American women undergoes a hysterectomy, with numbers varying widely from region to region.
In situations where errors have been deadly in human history, we have developed a tendency to avoid learning from experience. Instead, we rely on social learning of what to fear.
After all, legend has it that Martin Luther, inspired by a starry Christmas Eve sky, was the first to adorn a tree with candlelight. Germans can hardly imagine anything more traditional and peaceful than wax candles illuminating the branches of their fir trees. North Americans, in contrast, can go into hysterics at the same sight, with panic-filled visions of the tree—and the rest of the house—bursting into flames.
In the seventeenth century Françoise d’Aubigné, a three-year-old French girl, was pronounced dead at sea and sewn into a sack to be thrown overboard. A sudden meow revealed that her pet cat had crawled into the bag. When the cat was recovered from the sack, the girl was found to be very much alive. She later became the second wife of King Louis XIV and died at age eighty-three.
Yet advances in organ donation have brought an aspect of it back. Some people are afraid to donate their organs because organs are taken from persons who are pronounced dead, but whose bodies are still alive.
one of the women, a twenty-year-old who teaches the Koran, explained:5 “When you go outside, you never know what evil, shaitan, awaits you. You don’t want that evil to touch you, to possess you. That’s why you wear a burqa.”
One might conclude that Europeans are more risk seeking and North Americans more risk averse in food choice. But when it comes to genetically modified food, the roles are reversed. Europeans as well as Japanese tend to avoid genetically modified food while Americans gobble it up without batting an eyelid.
A representative survey in all member states of the European Union asked whether the following statement was true: Ordinary tomatoes do not contain genes, while genetically modified tomatoes do. True 36 percent False 41 percent Don’t know 23 percent
Aside from the dread risk potential of nuclear technology, there may be a historical reason for the German fear of nuclear technology. Germans, like Austrians, live on the very border of what was the Eastern bloc during the Cold War, and would have been hit hard in the event of a nuclear attack.
Medical treatments are also dependent on culture. Germans tend to have a romantic relation to the heart, while Americans tend to regard it as a mechanical pump and literally treat it that way, agreeing to many more coronary bypass operations than Germans and other Europeans do.
For instance, when a child observes her father shrieking with fear when a spider crawls over his arm, that single exposure can be sufficient to acquire the fear. But when the same child watches her grandmother react with fear toward rifles, motorcycles, and other potentially deadly modern inventions, fear is not as quickly learned.
The prominent role of animals in human phobias is probably due to the evolutionary origin of the fear circuit as a defense against animal predators. Preparedness allows humans to learn what to fear without actually experiencing negative consequences from an encounter.
Do parents know what their children really fear? Studies indicate that parents correctly realize that children fear divorce and Mom’s or Dad’s death, but are less aware that children feel stressed when their parents fight. Moreover, parents often underestimate the emotional prominence of school life and peer opinions: fear of humiliation, wetting their pants in class, and embarrassment in front of their peers.
Thus, in order to prevent their children from learning to fear the wrong things, parents who have the fear themselves should do their best not to show it in the presence of their children.
People’s goals have shifted steadily since the end of World War II toward more and more extrinsic goals. Annual polls of college freshmen showed that recent generations judged “being well off financially” as more important than “developing a meaningful philosophy of life,” while the opposite was true in the sixties and seventies.
In 2002 the average child reported higher external control than 80 percent of their peers in 1960. When children experience little internal control over their lives, they tend to become anxious in the face of uncertainty: I’m doomed; there’s no point in trying.
The shift toward external goals is not a biological fact engraved in stone; it is possible for all of us to refocus on internal goals and shed excessive anxiety about everyday risks and uncertainties.
According to a poll, 19 percent of Americans believe that they are in the top 1 percent income group. Another 20 percent believe that they will be there someday.1 Positive thinking is a good thing when you are young, but it has its downsides.
All of these experts had the same thought: Next year is like this year. If you look at the ten years of predictions, they consistently predicted the upward or downward trend of the previous year. In over 90 percent of individual forecasts, the experts followed that rule.
