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Risky Business

by Lindsey McCormack
November/December 2007 , Page 39

Why is it that the worst-case scenarios from terrorism are very motivating, while that's not the case for climate change?

Why should we read a book about disasters?

This book is about how to approach terrible, unlikely events. An example from ordinary life would be a car crash or serious illness; from political life, a terrorist attack, an outbreak of avian flu, or a nuclear power plant disaster.

No pun intended, but who’s your target audience?

Those of us who get very worried when we shouldn’t and don’t get worried when we should. I also want to help policymakers understand how their judgments can go awry.

Your scholarship focuses on environmental law. What prompted you to write about disasters?

What got me going were the different American approaches to terrorism and climate change. Why is it that the worst-case scenarios from terrorism are very motivating, while that’s not the case for climate change?

You quote Vice President Cheney’s one percent doctrine—the idea that we have to treat a slight chance of terrorist attack as a certainty in terms of our preparation. Do you agree with the Vice President?

Cheney’s on to something: If there’s a very small chance of horror, you have to take that seriously. But a one percent chance of horror is not the same as a 60 percent chance, and the reactions should be different.

Cheney’s theory sounds like what’s known as the precautionary principle, which many environmentalists use to argue for immediate action on climate change.

The idea is that, even if something is unlikely to come to fruition, we still ought to take precautions against it. It was one of the New York Times’ most important ideas of the year in 2001, and I think it’s a terrible idea.

Why?

It’s incoherent. When you try to take precautions, chances are you’ll be producing more risk. Take the example of medicines with potentially dangerous side effects. If we allow those medicines on the market, people may have adverse reactions. But if we don’t allow them on the market, people may die waiting for a cure. Under President Bush, the U.S. has followed a strong precautionary principle with respect to terrorism, while resisting it with great vigor in the environmental domain. Many European countries have been skeptical about the U.S. approach to terrorism because it doesn’t use enough cost-benefit analysis—but those same Europeans are precautionary with respect to environmental risks.

So how does one reduce the chance of disaster without causing more disaster?

Worst Case Scenarios by Cass Sunstein. Harvard University Press, 352 Pages, $24.95

I like cost-benefit analysis; it gets all sides of a problem on our view screen.

What happens when you apply cost-benefit analysis to war?

The people in the White House worst-cased the scenario of Saddam Hussein staying in power, but best-cased the outcomes of war. This is a real problem both for environmental protection and for terrorism: If you worst-case one aspect of the situation and best-case another, you can really screw up.

You show how support for the Kyoto protocol boils down to who benefits and who loses economically from general emissions caps. Are individual countries’ cost-benefit analyses overriding the good of the world?

The Bush administration was right to be skeptical of the Protocol. It would have cost us a fortune, and benefited both the U.S. and the world very little. Any agreement about climate change has to include both the U.S. and China—one won’t go without the other.

Isn’t it hard to justify cost-benefit analysis when human life is at stake?

I prefer to think we’re dealing with valuation of risk, not valuation of life. How much is a small risk worth? If there is a 1/1,000 risk of cancer from arsenic, and people say it’s worth it to them to pay $50 to eliminate that risk, but not $200, we should take that seriously.

Say I want to buy a house on the coast, but I hear the seas might rise and flood me out. What advice would you give me?

With financial decisions the simplest advice is to identify bad outcomes and think about probability. It’s good to think, “If I get a variable rate mortgage, what’s the worst that could happen?” A lot of people are in trouble now because they didn’t go through that exercise. They were just too optimistic.