Personal Risk Assessment and Management was another thread of the Reputation discussion last week at the IIW2006 that also appeared at the UNC Social Software Symposium. A sense that every decision we make balances on a complex dance of calculations in a complex personal formula: risk associations with the actions we’re about to take, benefit associations with the value we’ll derive from them. It was a part of the identity and reputation discussion for two reasons: the persistance of our digital selves (ephemeral permanence (Thanks Dr. Barreau)) as well as the everpresent searchability of these recorded digital facts and footprints. It was part of the social network and tagging discussion for the same reasons.
It’s related to our newfound need of navigating these new digital spaces with these new rules – but it’s also related to our ability to calculate well.
And how bad we are at calculating things well.
A couple weeks ago, Jeffrey Kluger wrote in Time:
Shadowed by peril as we are, you would think we’d get pretty good at distinguishing the risks likeliest to do us in from the ones that are statistical long shots. But you would be wrong. We agonize over avian flu, which to date has killed precisely no one in the U.S., but have to be cajoled into getting vaccinated for the common flu, which contributes to the deaths of 36,000 Americans each year. We wring our hands over the mad cow pathogen that might be (but almost certainly isn’t) in our hamburger and worry far less about the cholesterol that contributes to the heart disease that kills 700,000 of us annually.
We pride ourselves on being the only species that understands the concept of risk, yet we have a confounding habit of worrying about mere possibilities while ignoring probabilities, building barricades against perceived dangers while leaving ourselves exposed to real ones.
And then he begins to talk about the lizard brain and it’s very oldness as the reason we don’t do our math very well.
Part of the problem we have with evaluating risk, scientists say, is that we’re moving through the modern world with what is, in many respects, a prehistoric brain. We may think we’ve grown accustomed to living in a predator-free environment in which most of the dangers of the wild have been driven away or fenced off, but our central nervous system–evolving at a glacial pace–hasn’t got the message.
To probe the risk-assessment mechanisms of the human mind, Joseph LeDoux, a professor of neuroscience at New York University and the author of The Emotional Brain, studies fear pathways in laboratory animals. He explains that the jumpiest part of the brain–of mouse and man–is the amygdala, a primitive, almond-shaped clump of tissue that sits just above the brainstem. When you spot potential danger–a stick in the grass that may be a snake, a shadow around a corner that could be a mugger–it’s the amygdala that reacts the most dramatically, triggering the fight-or-flight reaction that pumps adrenaline and other hormones into your bloodstream.
…
“There are two systems for analyzing risk: an automatic, intuitive system and a more thoughtful analysis,” says Paul Slovic, professor of psychology at the University of Oregon. “Our perception of risk lives largely in our feelings, so most of the time we’re operating on system No. 1.”
We have trouble keeping statistics in the land of cold hard facts. Our ability to predict the future is notably poor as well. We have a pretty innate mistrust of statistics as they can be thrown at us with remarkable bias (and the fact that we have no sense of the very big or the very small). Given all these and our biological leaning towards making gut reactions – it does beg the question of how well we’ll deal with always-on, always-connected, personal information online.
How will we cope with having our lists of “friends” available to everyone? How will we cope with our poor decisions following us around for extended periods – potentially affecting others’ decisions about us without us ever knowing? That job offer you didn’t get a callback for? Was it because of those FaceBook pictures archived from 15 years ago? That email you sent (and got forwarded) before you breathed and counted to 10 (or 100) like Mom always used to say? You’ll probably never know. And therefore, your calculations are probably off anyways.
As we move forward, this personal risk management will need augmentation. It will move down to earth from the high flying hedge funds and the rest of the banking and finance industry. Individuals will get better tools for balancing their future costs.
And we’ll still be royally bad at it.
Since reputation and identity management are social phenomenons, at best we can help people make some of their decisions with some real facts – but when it comes down to it, they’ll probably still be thinking with their lizard brains.
Update: And soon after posting this I found a very reasonable rant against how we’re teaching a nation of students to think math is hard – and how that is dangerous.
Abbas Raza writes in “Aptitude Schmaptitude!”:
The way I see it, there was a one-two cultural punch which has knocked out numeracy in this country: first, there was a devaluing of mathematical competence in and by pop-culture; second, justification was provided for not learning mathematics to those already disinclined to do so by the devaluation. That’s it. The rest of this column is an attempt to flesh this out a little bit.
Tags: iiw2006 - lizardbrain - risk management - statistics
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