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Risks Are Inescapable – The Only Question Is Whether to Assess Them Accurately or Inaccurately

In my latest column for AIER, I lament the frequent misinterpretation of mishaps as evidence that greater precautions against particular risks are thereby necessarily justified. A slice:

In our personal, daily lives we understand that accidents happen. No particular mishap or accident that you suffer is necessarily evidence that you’ve been doing things wrongly. Put differently, each adult understands – if only subconsciously – that every possible course of action carries some risk. Therefore, an actual manifestation of a course of action’s risk is not itself proof that the risk had been underestimated or that precautions against the risk were insufficient.

Yet this mature understanding of the inescapability of risk, and of the meaning of accidents and occasional misfortunes, seems lacking in the public sector. Very often, a newsworthy calamity is taken to be proof that precautions against such a calamity must be intensified.

Was there a recent mass shooting? We must therefore tighten restrictions on gun ownership!

Was Americans’ access to imported medical supplies obstructed? We must therefore rely less on foreign production of these supplies!

Was there a fatal accident on an amusement-park ride? We must therefore increase the safety of amusement-park rides!

Did insiders at a big corporation commit fraud? We must therefore strengthen government oversight and regulation of corporate-managers’ behavior!

Was someone caught getting through airport security with a gun? We must therefore increase the severity of security screenings at airports!

Did someone recently die of food poisoning from canned vegetables bought in a supermarket? We must therefore regulate the safety of foods more stringently!

Each of these events is unfortunate. But none of them, standing alone, implies that we “must therefore do something.” Short of completely prohibiting the activity in question, every degree of precaution regarding that activity leaves some chance that engaging in that activity will result in a mishap, perhaps even a catastrophe. For example, even the most stringent and strictly enforced regulation of food safety will not eliminate the chance of someone dying from food poisoning contracted from store-bought foods. It follows that if government responds to a new case of fatal food poisoning by intensifying its regulation of food safety, the result might be regulation that’s excessively restrictive.

Of course, if reducing the prospects of food poisoning were humanity’s only goal, then each and every increase in the stringency of food-safety regulation would be worthwhile. But because we humans have countless goals other than to avoid food poisoning, steps taken to avoid such poisoning are costly. With each such step that we take, we deny ourselves other valuable goods, services, and experiences. At some point, then, an extra dollop of – economists call it “a marginal increment of” – food safety is no longer worthwhile. The (very real) benefit we would get from the extra protection from food poisoning is less than the (very real) benefits from other goods, services, and experiences that we would have to sacrifice to obtain this extra dollop of protection from food poisoning.

Unfortunately, politicians are biased toward reacting to the latest headlines. Reacting in this manner is a cheap and flashy way of creating the appearance of being caring and responsive. And reporters and headline writers are biased toward blaring out, and even exaggerating, news of the latest unfortunate event. Too often, in response, governments spring into action to implement or to strengthen protections against whatever misfortune is blared in today’s headlines. The too-frequent result is excessive protection against particular risks.

While a series of particular misfortunes might accurately reveal the desirability of taking further precautions against those misfortunes, in almost all cases a single or infrequent misfortune – a misfortune that occurs only once or only relatively rarely – does not, standing alone, reveal that precautions should be intensified. Each of us in our private lives has strong incentives to make these assessments correctly, for if we don’t, we personally suffer. Politicians and bureaucrats, in contrast, not only do not personally suffer if they impose excessive precautions, they are often lauded for doing so – which is yet another good reason for reducing the role of government.

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