Risks in the Modern World: What Prospects for Rationality?

Political Risk Management Is Irrational

MARCH 01, 1995 by FRED SMITH

Mr. Smith is president and founder of the Competitive Enterprise Institute in Washington, D.C. He is co-editor of Environmental Politics: Public Costs, Private Rewards (Praeger, 1992).

Risk refers to the likelihood that something will go wrong.[1] People naturally fear such mishaps, and risk aversion is a basic survival trait. Only non-survivors rush in where angels fear to tread![2]

Even in our relatively safe world, there is much to fear: crime, disease, highway and other accidents. The surprising issue is not that people fear, but that people should come to fear the dynamic forces upon which America was built.

Americans are afraid of economic growth and technological advance, even though these forces largely account for our current well-being. The prominence of this attitude is a relatively new phenomenon; as recently as the 1950s, American culture still revered science and technology. Scientists and innovators were heroic figures, the Bell Science Hour was a popular television series, and youngsters read Microbe Hunters with enthusiasm. No longer. Today’s popular culture uses the scientist more as a careless Dr. Frankenstein than a heroic Prometheus and views scientific achievements as more evidence of man’s arrogance than man’s genius. What accounts for the modern reaction?

The Wildavsky Legacy

More than almost any analyst, the late Aaron Wildavsky examined why America had become so frightened and, through his books Searching for Safety, Risk and Culture (with Mary Douglas), and The Rise of Radical Egalitarianism, among other works,[3] he largely structured the debate on reform of risk policy. Consider some of his basic concepts:

•       The safe and the dangerous are intertwined: Wildavsky was fond of the Jogger’s Dilemma. Joggers, he noted, all too often drop dead of heart attacks in mid-stride. The stress of exercise is too much for some bodily systems to handle. Nonetheless, joggers are less likely to die of heart disease than their sedentary colleagues and exercise provides significant long-term health benefits. Jogging may be a “risky” activity, but it tends to reduce the health risks that people face. Wildavsky used this analogy to illustrate that safety and danger are rarely separable, but rather inextricably mixed elements of life. The conclusion, in Wildavsky’s view, was: We must not seek a “safe” course but rather a “safer” course. To make our lives safer, we must prudently accept the introduction of new risks.

•       We search for safety: Wildavsky noted that safety is discovered—not designed. Increased safety results from a learning process. We try new things, make mistakes, and learn from our experiences. Over time, risks are reduced. This “trial by error” evolutionary approach to a safer world stands in sharp contrast to the “trial without error” approach demanded in today’s highly politicized risk management world.

•       Wealthier is healthier: Money is not just wealth; it is also a measure of our ability to fend off disasters. A wealthier population can buy healthier food, live in safer neighborhoods, purchase higher quality goods, see doctors more frequently. To Wildavsky, this suggested that all risk reduction regulations should meet a minimum test: They must save more people than they kill. Many of America’s more expensive regulations fail this standard.[4]

•       Anticipation vs. resilience: Wildavsky challenged the common belief that risks should be avoided, that we should always look before we leap. He argued that in a world where many, perhaps most, serious risks are surprises, the more rational course is to improve our resilience—our ability to ride out unexpected disasters. Greater wealth is one element of this strategy. These common-sense approaches to risk championed by Wildavsky are largely ignored in the policy arena. Politicized risk managers seem obsessed with the risks of change but treat lightly the risks of stagnation. The risks of going too fast are carefully examined, but the risks of going too slow are largely ignored. Yet, as any bicycle rider knows, speed can improve stability and enhance safety, though it can also increase the damage from a fall. Once a society demands unattainable levels of safety—a risk-free world—public policy becomes divorced from reality. To an increasing extent, that is the situation we are in.

Why Is America Afraid?

Wildavsky believed that the primary factor explaining modern attitudes toward risk was the dramatic rise in the power of radical egalitarians—that is, those who see all differences among the citizenry as evidence of injustice. In a balanced culture, egalitarian values are tempered by other viewpoints. The egalitarian impulse underlying the sentiment that “all men are created equal” is counterbalanced by the notion that all men must be free. However, like Alexis de Tocqueville before him, Wildavsky noted that America has always been prone to egalitarian excesses, and this tendency led to the current situation, particularly after the Vietnam War radicalized a whole generation of intellectuals.

Egalitarians view differentiation itself as evil. Thus they oppose the “creative destruction” that accompanies economic and technological change, since change creates winners and losers. Egalitarians favor a “steady-state” economy and thus view with suspicion the changes brought about by economic and technological growth. They sympathize with claims that cancer is caused by corporate malfeasance and that modern technology is creating public health disasters. Their egalitarian preferences for a world of sharing, of communitarian values, lead them to see the world in stark Malthusian tones. They readily believe that the earth is inherently fragile, that man’s activities threaten to warm or cool or dry or flood the earth. A world at risk demands common sacrifice, and compels us all to band together if we are to survive.

To Wildavsky, modern environmentalism is best viewed as a restatement of this egalitarian distaste for our modern society. However, he also examined many of the standard arguments advanced by those supporting modern attitudes toward risk:[5]

•       In the modern world, environmental risks are extremely important: In this view, it is rational to fear technology and industry, which have unleashed dangerous involuntary risks on humankind. In fact, however, objective data suggest that technology per se creates few public health concerns of a magnitude comparable to those faced by primitive societies. For example, relatively few cancers can be attributed to pollution, occupational exposures and the like.[6] People are living longer, healthier lives than ever before. Environmental risks are still very low compared to other existing threats. The world is not getting riskier, it is getting safer, and the environmental concerns many people fear are not very dangerous.

•       Modern Americans are more risk intolerant: In this argument, it is not that the world has become riskier; but, rather, a wealthier, healthier population has naturally become more concerned with risks. This argument seems plausible. Earlier American leaders grew up during the Depression and World War II and experienced serious dangers. In contrast, “baby boomers” have experienced few real risks. Not surprisingly, therefore, the boomers are more risk averse and demand a higher level of safety than their parents. However, this explanation ignores the fact that baby boomers, particularly those who agitate for government risk regulation, have not displayed any great aversion to risky lifestyles. They have experimented widely with potentially hazardous drugs, promiscuous sex, and a wide array of other dangerous, albeit exciting, recreational activities, from hang gliding to Third-World tourism. Increased risk aversion per se does not appear to explain modern attitudes toward risk, though it may have some influence.


•       There are risks and there are risks: To some, public attitudes toward risk are a function not only of the “objective” magnitude of actual risks, but also of the manner in which these risks occur. Risks that are voluntary, visible, or reversible are more acceptable than risks that are hidden, imposed, or permanent. This is the difference between “hazards” (risks that are “legitimate”) and “outrages” (risks that are not). This explanation has a surface plausibility.

But which risks are voluntary and which are not? Are the risks of living near a nuclear plant, of drinking water that may contain low levels of chemicals, or of sharing blood with strangers accepted voluntarily? Or are they outrageous risks imposed on us by the nuclear industry, manufacturers whose chemicals get into the water supply, and AIDS carriers? Different people at different times seem to view the same risks very differently. Environmentalists advocate limitations on smoking in private restaurants, even though secondhand smoke is an avoidable risk (and an inconsequential one in most cases as well). However, they see nothing wrong with regulations that cause harm by reducing wealth or denying technology. The fact that any risk may be easily reclassified according to the values of the judging party makes the distinction between voluntary and involuntary risk highly suspect.

•       America has enlarged its fear-promoting institutions: Since World War II, risk regulatory agencies have seen their powers expanded and a host of new agencies has been created. The alphabet soup of regulatory offices—FDA, EPA, OSHA, FTC, etc.—emphasizes certain risks and ignores others. These agencies are assigned no responsibility for the risks of economic and technological stagnation; they need consider only the possible risks from a new product or process. Moreover, if such agencies are to maintain and expand their staffs and budgets, they must persuade Congress that their role is essential. That reality explains why EPA pronouncements read as if they were written by Stephen King. Environmental groups are under similar pressure in their drive to raise funds. Incentives to arouse fear do help explain the growth of anti-technology attitudes in America.

The Role of Culture in Risk Selection

Wildavsky recognized that modern attitudes toward risk had many causes, but he believed the dominant factor remained cultural. The things we choose to fear reflect our values more than knowledge about actual risks. We select to fear those things that convince us that our deeply held prejudices are valid. What else can explain our willingness to ignore the vast ocean of natural carcinogens in which we live, while spending literally tens of billions on the trivial quantities of pesticide residues? Wildavsky believed that America’s intense preoccupation with trivial risks reinforces egalitarian values. Finding threats in economic activity and technological change allows us to castigate business, condemn modern wealth distributions, and argue for a radical restructuring of modern society.

What Is to Be Done?

Any improvement in risk management will require both reforming existing institutions and expanding the scope of private risk management. The latter is preferable, but political realities require attention to short-run reforms in addition to long-term solutions.

Currently, the EPA and other risk regulatory agencies are biased against change. These agencies must be forced to consider the risks of economic and technological stagnation as well as the risks of technology itself. How might this be done? One way is to encourage “conflicts of interest” within agencies’ goals—for example, all risk agencies should also have the responsibility of promoting technology.

Such an approach would reverse decades of “good government” reforms designed to separate agencies devoted to safety from agencies focused on advocacy. Past reforms gave the EPA control over agricultural chemicals, while the U.S. Department of Agriculture was to concern itself with farm output only. The idea was to make the EPA more focused on safety; but it also gives the EPA little reason to consider the impact of pesticide regulations on agricultural productivity, food prices, or product availability.

A less ambitious step would be to create a new position in all regulatory agencies to deal with new technologies. Appoint a Technology Ombudsman charged with making a case for the earliest possible approval of the broadest possible range of new technologies. In order to grow, the office would have to demonstrate that the EPA and other agencies are regulating too much, thus providing a counterweight to the presumption that more regulation is always good. The goal would be to ensure a more balanced trial, with advocates on both sides of the issue. (The Catholic Church pioneered in this type of reform when it created both an Advocate of God and a Devil’s Advocate in its canonization process. One office was charged with advancing the case for sainthood, the other for shooting it down.)

Another possible institutional reform would be to mandate Post-Regulatory-Approval Audits for products when they are finally approved. The goal would be to assess the losses (both economic and to human health) associated with their delayed introduction. Thus, when the Food and Drug Administration announces a new drug, celebrating how many lives it will save in the future, such an audit would point out how many lives could have been saved had the FDA acted even sooner.

If such reforms are to have any chance of success, some support or at least acquiescence by egalitarians will probably be necessary.[7] What would motivate this group to rethink its opposition to choice and technology? Possibly the distributional consequences of anti-technology and anti-growth policies could persuade them. Little effort has been spent to show the effect of modern risk management policies on the poor and on the Third World, yet they may be significant. To choose just one example, if bans on pesticides make fruits and vegetables more expensive, the poor are hurt more than the well-off.

Toward Private Risk Management

Unfortunately, reforming the political bureaucracy is rarely successful. Thus, we should begin now to relegitimize private risk management.[8]

The task of government is not to ensure our safety—but to ensure our rights. We may elect to hang-glide, to hunt, to smoke, to explore underwater caves, to ski, to take non-approved pharmaceutical products, and we should be free to do so. There are risks entailed by such choices, but people should be free to make those choices and bear the responsibility for them. There can be no values, no clarity about justice in a world where others decide what is good for us.

Individuals should be free to voluntarily expose themselves to increased environmental risks if they believe that there are offsetting benefits. For example, some people may oppose the siting of a new incinerator in their backyard, while others may see it as a source of wealth and opportunity. Different people with different needs will judge such situations differently, examining the risks and the benefits that lie on each side of the equation. Furthermore, in accepting risks, people should be free to use private means of managing their risks. A role for policy is to make sure that private insurance is not destroyed by government, to restore and strengthen the traditional right of private contract, and to protect private ownership.

Aaron Wildavsky’s work points out the need to expand the arguments in favor of private risk management and to elucidate the reforms that can enable us to achieve it. As former EPA Administrator William Ruckelshaus has noted, echoing Ben Franklin, a frightened population is often all too willing to sacrifice its freedom for the promise of security. Many in America have understood that fact and are using it to erode our freedom.

In sum, fear is rational; today’s system of political risk management is not. Our challenge is to make that fact evident to the citizenry. []

1.   This article seeks to synthesize the work of Aaron Wildavsky on risk and to suggest the policy implications of his work. Wildavsky was the world’s expert and his untimely death in September 1993 left many unanswered questions. I venture this essay in the hope that others will take up the quest.


2.   Of course, the sociobiological case for heroism (the altruistic gene argument) does suggest that this remark be qualified.


3.   See Aaron Wildavsky, Searching for Safety (New Brunswick, N.J.: Transaction Books, 1988); Mary Douglas and Wildavsky, Risk and Culture: An Essay on the Selection of Technical and Environmental Dangers (Berkeley: University of California Press, 1982); and Wildavsky, The Rise of Radical Egalitarianism (Washington: American University Press, 1991).


4.   See, for example, Daniel Mitchell, “The Deadly Impact of Federal Regulations,” Journal of Regulation and Social Costs, June 1992; and, Wildavsky, Searching for Safety.


5.   For a more detailed discussion of this point, see “Who Wants What and Why? A Cultural Theory” and “Theories of Risk Perception” in Wildavsky, The Rise of Radical Egalitarianism.


6.   See Michael Gough, “How Much Cancer Can EPA Prevent?” Risk Analysis, Vol. 10, no. 1, 1990.


7.   Ideas do have consequences—especially among the intellectual class. Consider, for example, the shift of opinion at the New York Times on the value of minimum wage legislation. Over time, the editorial staff became convinced that such laws harm, rather than help, the poor. See the New York Times, “The Right Minimum Wage: $0.00,” January 14, 1987.


8.   These points are elaborated in my chapter, “Environmental Policy at the Crossroads,” in Environmental Politics: Public Costs, Private Rewards, Michael Greve and Fred Smith, eds. (New York: Praeger, 1992).


March 1995

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