Comments on: The Role of Emotion in Risk Assessment http://www.nakedcapitalism.com/2007/11/role-of-emotion-in-risk-assessment.html Mon, 23 Nov 2009 12:30:27 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/11/role-of-emotion-in-risk-assessment.html#comment-1381 Anonymous Sat, 03 Nov 2007 15:18:00 +0000 http://www.nakedcapitalism.com/2007/11/the-role-of-emotion-in-risk-assessment/#comment-1381 "But even if they had read the facts, we have a number of findings that suggest facts alone often are not enough to change peoples' perceptions of risks. People need to relate to those facts at an emotional level for risk judgments to be affected."<br/><br/>The human brain doesn't appear to be designed to understand risk in many forms. Education in the relevant facts is easily overridden by the mind. Relating to risk "at an emotional level" is much easier said than done. Go to any casino to see examples. “But even if they had read the facts, we have a number of findings that suggest facts alone often are not enough to change peoples’ perceptions of risks. People need to relate to those facts at an emotional level for risk judgments to be affected.”

The human brain doesn’t appear to be designed to understand risk in many forms. Education in the relevant facts is easily overridden by the mind. Relating to risk “at an emotional level” is much easier said than done. Go to any casino to see examples.

]]> By: Yves Smith http://www.nakedcapitalism.com/2007/11/role-of-emotion-in-risk-assessment.html#comment-1371 Yves Smith Sat, 03 Nov 2007 07:50:00 +0000 http://www.nakedcapitalism.com/2007/11/the-role-of-emotion-in-risk-assessment/#comment-1371 I'd accept the argument more for the coast than the people who lived further inland. But the Oregon coast is gorgeous too, not as expensive, and not as fire-prone (although the area obviously offers nowhere near the same economic opportunity as in California). And my hugely risk averse relatives live in a very pretty area of coastal Maine. Safety, but crappy winters.<br/><br/>I haven't seen the backup to the NSF funded study, but in the research Webber found for her article, it is pretty well documented that the vast majority of people over-estimate the odds their own success and of activities they are associated with. But you make a fair point that even if they made an accurate weighing of the probabilities, they still might have made the same choice. I’d accept the argument more for the coast than the people who lived further inland. But the Oregon coast is gorgeous too, not as expensive, and not as fire-prone (although the area obviously offers nowhere near the same economic opportunity as in California). And my hugely risk averse relatives live in a very pretty area of coastal Maine. Safety, but crappy winters.

I haven’t seen the backup to the NSF funded study, but in the research Webber found for her article, it is pretty well documented that the vast majority of people over-estimate the odds their own success and of activities they are associated with. But you make a fair point that even if they made an accurate weighing of the probabilities, they still might have made the same choice.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/11/role-of-emotion-in-risk-assessment.html#comment-1369 Anonymous Sat, 03 Nov 2007 07:10:00 +0000 http://www.nakedcapitalism.com/2007/11/the-role-of-emotion-in-risk-assessment/#comment-1369 "This may explain why people sometimes make seemingly irrational, high-risk decisions, such as settling along the coastline where there is greater vulnerability to earthquakes and hurricanes."<br/><br/>Have the authors seen the southern California coast? I'd hardly call it "irrational" to want to live there. Couldn't people simply be accepting a higher level of risk in order to live in a more desirable area? Standard risk/reward tradeoff?<br/><br/>Love the blog. “This may explain why people sometimes make seemingly irrational, high-risk decisions, such as settling along the coastline where there is greater vulnerability to earthquakes and hurricanes.”

Have the authors seen the southern California coast? I’d hardly call it “irrational” to want to live there. Couldn’t people simply be accepting a higher level of risk in order to live in a more desirable area? Standard risk/reward tradeoff?

Love the blog.

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