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Why We Worry About the Wrong Things, Part II

Written by: Paul Kedrosky

Article Overview: I mentioned it earlier in a round-up, but I really want to draw people's attention to Time's cover article this week. The magazine has done some very good work lately, and this week's cover is another example. It painstakingly gets underneath our human penchant for getting possibilities, probabilities, and likelihoods all messed up, worrying over the least likely things, and being oblivious to the things that have a high chance of killing us.

Why We Worry About the Wrong Things, Part II

I mentioned it earlier in a round-up, but I really want to draw people's attention to Time's cover article this week. The magazine has done some very good work lately, and this week's cover is another example. It painstakingly gets underneath our human penchant for getting possibilities, probabilities, and likelihoods all messed up, worrying over the least likely things, and being oblivious to the things that have a high chance of killing us.

Much of this has shown up in other guises in behavioral finance and elsewhere, but it is still solid reading for investors, among others, and it is worth pushing on people around you.

Shadowed by peril as we are, you would think we'd get pretty good at distinguishing the risks likeliest to do us in from the ones that are statistical long shots. But you would be wrong. We agonize over avian flu, which to date has killed precisely no one in the U.S., but have to be cajoled into getting vaccinated for the common flu, which contributes to the deaths of 36,000 Americans each year. We wring our hands over the mad cow pathogen that might be (but almost certainly isn't) in our hamburger and worry far less about the cholesterol that contributes to the heart disease that kills 700,000 of us annually.

As a kind of digression, I like that the piece is sufficiently unorthodox such as to defang some of the useless sops that are tossed the wrongly worried out there. For example:

Officials are fond of reassuring the public that they run a greater risk from, for example, drowning in the bathtub, which kills 320 Americans a year, than from a new peril like mad cow disease, which has so far killed no one in the U.S. That's pretty reassuring--and very misleading. The fact is that anyone over 6 and under 80--which is to say, the overwhelming majority of the U.S. population--faces almost no risk of perishing in the tub. For most of us, the apples of drowning and the oranges of mad cow disease don't line up in any useful way.
But such statistical straw men get trotted out all the time. People defending the safety of pesticides and other toxins often argue that you stand a greater risk of being hit by a falling airplane (about 1 in 250,000 over the course of your entire life) than you do of being harmed by this or that contaminant. If you live near an airport, however, the risk of getting beaned is about 1 in 10,000. Two very different probabilities are being conflated into one flawed forecast. "My favorite is the one that says you stand a greater risk from dying while skydiving than you do from some pesticide," says Susan Egan Keane of the Natural Resources Defense Council. "Well, I don't skydive, so my risk is zero."

Lovely stuff.

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Article Tags: apples, avian flu, bathtub, behavioral finance, cajoled, cover article, digression, guises, heart disease, long shots, mad cow disease, oranges, overwhelming majority, pathogen, penchant, peril, probabilities, sops, t line, vaccinated



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Re: Stay happy everyone - Thanks for that Evan, your post reminded me of that song 'Don't Worry Be Happy' by Bobby McFerrin which I was shocked to learn was a hit in 1988, seems like yesterday, regards, Mal.
Patent information - I'm also interested in Part 2. Thanks.
Patent Process - Interesting to hear your experiences with the patent process - what's Part 2?
Re: Why Franchises Fail - [quote="Nana":307g5e63]Another reason franchises can fail is due to lack of effort on the franchisees part. If the franchisee does not give it their 110% and purely imitates rather than innovates they will increase their chance of failure.[/quote:307g5e63] I agree. Sometimes franchisees rely too much on the franchisor. They think the franchisor will run their business. Wrong! The franchisee is responsible for manging day to day operations of his franchise location.
Re: Seth Godin: Star Fish v Long Tail - Thanks for sharing, David. I always enjoy the interest it brings me when I read these types of things. Things that make you think to consider other possibilities, no matter how obvious they may seem. Cheers, Emma


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