Responsible Precautions for Uncertain Environmental Risks

Adapting Policy Analysis for Uncertain Futures
By W. Kip Viscusi
March 08, 2019

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Abstract

Uncertain future risks pose cognitive and analytical challenges. Low probability events coupled with potentially severe outcomes pose well-known problems for decision making and are also prone to public overreactions. Imprecision in risk estimates generates behavioral biases such as ambiguity aversion. Policy prescriptions to adopt conservative values and to undertake “no regrets” policies institutionalize these biases. The emphasis instead should be on reaping the potential gains from exploiting risk ambiguity and opportunities for learning about uncertain risks. Simple guidelines such as recommendations for less ambitious investments in the presence of irreversible effects also may have restricted applicability. Standard discounting procedures without any adjustment for temporally remote effects can properly weight future benefits and costs.

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