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The Rational Response to Terrorism; by Nobel Laureate Gary Becker
Topic Started: Jul 23 2005, 03:50 PM (175 Views)
Jeffrey
Senior Carp
Here: http://www.ilr.cornell.edu/international/e...nsteinPaper.pdf

I found this article from the excellent review on page 72 of the current Economist. The paradox is that terrorism kills few, but affects the actions of many. People systematically misperceive risk. The paper analyses the responses of airline pilots after 9-11 and bus and cafe users in Israel.
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QuirtEvans
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I Owe It All To John D'Oh
Misperception of risk is always a problem when you have an event with a very small likelihood but a very large negative outcome, if it occurs. People tend to put a higher expected value on that event than an analysis of the probability and the cost of the outcome would warrant.

Terrorism is hardly the only example. There are plenty of other examples, ranging from diseases to natural disasters to airplane crashes.
It would be unwise to underestimate what large groups of ill-informed people acting together can achieve. -- John D'Oh, January 14, 2010.
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Jeffrey
Senior Carp
Quirt - Yes, but Becker also goes beyond that. His point is that people react primarily to the feeling of fear, not to the actual risk, and try to avoid the psychological state of fear, by avoiding the activity (flying planes, going to an Israeli cafe) that causes the fear.

He analyses people who spend the effort (Becker regards this as a form of "human capital" in economic terms) to get courage and overcome their feelings of fear, and keep their activity, with those who keep their fear, and avoid the psychological feeling by avoiding the activity. He analyses airline pilots compared to occasional flyers, and people who go to Israeli busses and cafes frequently, or only occasionally. His point is that people who go to Israeli cafes or travel on planes frequently, usually spend the effort to overcome their fears (which are, from a purely statistical standpoint, irrational, since car crashes kill far more people than terrorism), and get on with their lives without much change. Those who fly only sometimes, or only sometimes go out to cafes, are the ones with the most behavioral change, since it is easier for them to avoid the activity, than to overcome their fear. Lots of statistics. Basic point: terrorists can kill people, but it is up to us to decide whether to be terrorized and change our life as a result. This is the best actual analysis of the human psychological response to terrorism I have seen, by a respected economist.
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Buxtehude
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Quote:
 
His point is that people react primarily to the feeling of fear, not to the actual risk, and try to avoid the psychological state of fear,


Yeah, but people play the lottery too. I'm thinking that the terrorist card isn't the one you want to draw on any particular day.
Sister, they don't know what to do with one of me.

-- Riddick
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