Saturday, June 28, 2008

How To Live Dangerously - Risk in Modern Society

Book Cover

'How to Live Dangerously' - Why we should all stop worrying, and start living by Warwick Cairns is a straight talking book which seeks to assess the reality of perceived dangers. Some of the statistics show how we can gain a false impression of risk and as a consequence make misinformed risk.

For example, the book produces statistics such as:
  • The chance of someone abducting your child is so low, it would only happen once every 200,000 years; and even then you would almost certainly get your child back anyway.
  • Flying is much safer than driving a car. You'd have to fly every day for the next 26,000 years to die in a crash. (during that time you would have died 20 times driving to the airport.)
It is a theme we have mentioned previously on this blog; certain fatalities receive big newspaper headlines because they are high impact. If 3,000 people die in a single terrorist attack, it of course, makes front page news. But, did you know that, worldwide, an average of 3,000 people die every day from car accidents? Yet, because people die in ones or twos it rarely makes more than a local paper. Therefore, our perceived risk of car fatalities and terrorist incidents are skewed by the impressions generated by the media.

Even staying in the home can be dangerous, according to Professor Richard Wilson of Harvard University, falls kill 16,000 Americans every year.

What is the relation to economics of this book - Living Dangerously? In economics we try to undertake cost benefit analysis to help achieve the optimal distribution of resources. For example, apparently 59% of parents think it a good idea to fit an electronic tracking device into children, so that if they get abducted they can be tracked. However, if this scheme costs several million pounds, the opportunity cost is very high. Why spend so much money on electronic tracking, when teaching about road safety or DIY safety would have a much bigger impact in terms of lives saved?

It is only when we keep things in perspective and understand the real costs and benefits that we can make the correct decisions. There is also a growing trend in modern society to try and eliminate risks when actually doing this creates bigger problem. For example, last week, the economist reported how many trees in the UK were being cut down because councils are worried about being sued over falling trees. Yet, the actual risk from being killed whilst walking under a falling tree is minimal to say the least.

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