Tuesday, January 29, 2008

How We Get the Odds Wrong

I thought this article in Psychology Today was pretty interesting. Basically, it points out that we as humans are terrible at analyzing risk. It notes,

Our brains are terrible at assessing modern risks. Here's how to think straight about dangers in your midst...

These days, it seems like everything is risky, and worry itself is bad for your health. The more we learn, the less we seem to know—and if anything makes us anxious, it's uncertainty. At the same time, we're living longer, healthier lives. So why does it feel like even the lettuce [with pesticides on it!] is out to get us?

The human brain is exquisitely adapted to respond to risk—uncertainty about the outcome of actions. Faced with a precipice or a predator, the brain is biased to make certain decisions.

The first item it points out hits home for me:

I. We Fear Snakes, Not Cars
Risk and emotion are inseparable.

Fear feels like anything but a cool and detached computation of the odds. But that's precisely what it is, a lightning-fast risk assessment performed by your reptilian brain, which is ever on the lookout for danger. The amygdala flags perceptions, sends out an alarm message, and—before you have a chance to think—your system gets flooded with adrenaline...Emotions are decision-making shortcuts.

As a result of these...emotional algorithms, ancient threats like spiders and snakes cause fear out of proportion to the real danger they pose, while experiences that should frighten us—like fast driving—don't. Dangers like speedy motorized vehicles are newcomers on the landscape of life. The instinctive response to being approached rapidly is to freeze. In the [past], this reduced a predator's ability to see you—but that doesn't help when what's speeding toward you is a car.

And sure enough, despite the fact that I work on roads for my occupation and know the frequency of accidents, I am I admit a bit scared of snakes. Never have I felt those same emotions getting into a car...

So here's to recognizing what's truly dangerous and not living in fear...


clauff said...

Certainly makes sense when you consider that our brains are primarily used to store experiences that become the basis of decisions to ensure our survival. In short, we think slice risk.

If we had to sit there and think about a risk and break out it out rationally, we would construct a risk/benefit scenario, we would analyze each component of the risk, and then we would rationally decide if the danger is big enough to run from it or not. If we made decisions that way, there would be no human life. We'd have died out a long time ago.

So, very fascinating.

Chairman said...

If you buy into the evolutionary argument, people are predisposed to be risk-averse. This translates well when you hear a noise in the bush. Even though it's only a 50-to-1 shot that it's a sabre-toothed tiger, you get ready to run, anyway, since the downside is much worse than the upside. Obviously, this that does not translate over well into situations where people looking to make optimal moves in a structured problem setting (like diversifying a portfolio, let's say).

However, some folks are actually better in risky environments. They've done studies where experienced gamblers react more accurately to random events that indicate high-risk than non-gamblers do (they react about the same for low-risk situations).

So, the proper assessment of risk is the ability to know what information is actually useful (we call it "diagnostic") and what is just noise. In the example from the original posting, knowing whether the object that's bearing down on your is a predator that's focusing on motion or simply a large object that's moving in your direction is diagnostic. After all, do you think that our cavemen ancestors would just stand there if they saw a large object falling at them, say a tree or a boulder? I'd guess not.

So, our inability to assess the danger of cars probably comes from somewhere else, not quite what the posting proposes. A more likely factor is something we call "locus of control." Whether it's true or not, when we drive, we believe that we are in control of the situation, and that we'll be able to react to whatever comes. We believe that we can control our safety in a car. However, we don't believe that we can control whether or not a snake bites us.

Greg said...

Let's say you were a contestant on a game show, and the host told you that behind just one of the three doors was a prize. So you pick Door #2. Then the host says (honestly), "There is no prize behind Door #1. Would you like to switch your choice to Door #3?

If you were that contestant, what would you do?

When most people are confronted with this question, the answer I usually hear is, "Uh, it doesn't matter right? I'd just stick with my original choice."

Then I explain that, assuming each door originally had a 1/3 chance of containing the prize, you actually double your chances of winning by switching to Door #3. Mathematically, the reasoning is that at this point the only way you could possibly be wrong is if your original choice was correct (Door #2). However, there is a 2/3 chance your first choice was wrong, so given the conditions of the game show, you have a 2/3 chance of being correct when you switch.

After hearing the explanation, people tend to fall into three categories. #1) They don't believe/understand the explanation and continue to think it doesn't matter if they switch or not. #2) They understand and are glad to be armed with this information as it might one day help them on a game show. #3) They understand, but still say they'd stick with their original choice because they couldn't bear the possibility of having picked the correct door only to switch away from it and lose.

So yeah, people can be funny when it comes to assessing risk versus reward. Although, for the record, when I'm driving on the interstate and look into my rear view mirror, I sometimes see a tsunami of steel and fire.

Chairman said...

All praise be to Monte Hall. There's nothing like giving away a live goat as a booby prize.

Robby said...

Wouldn't the snake (many bite and some are poisonous or dangerous in other ways) likely be the more risky of the two? I don't see how this is a good example. Cars are generally quite safe, unless a speeding car is headed right towards me in which case you can bet I'm terrified.

Also, Monte Hall is pretty much a trick question which a lot of people get wrong right away. For the majority of risk analysis problems our initial logic seems to work decently. Those who fall under category #1 don't really apply and maybe I'm wrong but I would guess >90% of those who actually understand the problem would fall under category #2.

Greg said...

Heheh, I didn't know who Monty Hall was so I looked him up on Wikipedia. There was a whole page dedicated to the The Monty Hall Problem. Talk about more information than I wanted to know. =)

Robby, regarding cars vs. snakes, I think the point they're making is that if you were to ask a group of city dwellers, "What are you afraid of?" You'd probably get answers like, "I'm afraid of snakes" or "I'm afraid of spiders" or "I'm afraid of flying in an airplane," but fewer people would say, "I'm afraid of cars" even though, statistically speaking, a city dweller is more likely to be seriously injured by a car than by any of those three aforementioned answers.

As for driving, even though I do enjoy it, there have been times where I've wondered if it would be worth giving it up completely.

I don't know, maybe I should just be a mountain man... but then I'd have to worry about mountain lions... well, I'd probably like living by the ocean better anyway... but now we're back to those tsunamis again...

Robby said...

Flying in an airplane is a good example of improperly analyzing risk.

The example in the article of freezing when being afraid of a car applies well to deer.

Westy said...

Cars are generally quite safe...

Depends on your definition of 'safe'. Approximately 1 in 100 people will die of injuries received in a car accident in their lifetime.

As you point out, it's much safer to fly. And it's also much much less likely that you'll die from an encounter with a snake.

Chairman said...

Wait. I saw that Snakes on a Plane documentary a while back. People were dying all over the place. I'll stick with driving, thank you very much.

Stephen said...

You should check out the book The Black Swan if this kind of empirical analysis (or how it doesn't work) is interesting to you.