Perceptions of Risk and Their Effects on Decision Making

Abstract

The evaluation of risks is a part of any rational decision-making process. But what risks? And whose evaluation? Measures of risk tend to fall in two broad categories: those that purport to observe or calculate the actual risk of a process or project and those that rely upon the judgments of those assessing the risk. A nomenclature problem arises here. Some characterize the categories as “objective” and “subjective”; others, perhaps somewhat arrogantly, call them “real” and “imagined.” Technical experts tend to consider the use of measures of the first sort the only legitimate way of describing risk, yet measures of the second sort tend to dominate the thinking and actions of most individuals. Whatever they are called, the two measures of risk seem seldom, if ever, to agree. The social and psychological reasons (or explanations) for the disparity are interesting but, beyond them, there are important implications of the disparity for decision making in an increasingly technological society. The distinction between the two measures of risk creates difficulties for decision makers and regulators among which are: an increase in the use of propaganda and indoctrination by government, industry, and technical experts in attempts to convince the public that technical estimates of risk are valid; a continued erosion of trust and understanding between experts and the rest of the public; further complication in the already involved process of setting priorities for government or corporate programs; and a challenge to decision makers to explain uncertainties about the effects of their actions.