Informal Risk Perceptions and Formal Theory

Economists have argued persuasively that our goals are wider than just risk minimization, and that they include a prudent weighing of costs and benefits. This economic line of thought recognizes that our policy goals are complex. As we widen the range of goals we are willing to entertain, though, we need to check that the methods we customarily employ are appropriate for the tasks to which we customarily apply them. This paper examines some economic methods of risk assessment, in light of the question of what our policy goals are and should be. Once the question of goals is open, more complexities than just cost intrude: what the public wants and why begs to be addressed. This leads us to the controversial issue of public risk perceptions. We have now examined a number of procedures that experts use to make public policy decisions. Behind all these issues is always the question of social welfare: what actions can we take, what policies should we embrace, to make the world a better place? In many cases, the public and the experts disagree about what the right choice is. In the first section, we saw a possible defense of the experts based on democratic theory: the people's participation, and even their will, can be legitimately set aside in the pursuit of their true interests. If this defense is to work, a great deal of weight rests on the question of the people's interests and the competence and integrity of the experts' pursuit of it. But at the same time, social preferences are ill-defined, and so are not good candidates for rational actor theory. Both the prescriptive legitimacy claim and the very workings of formal theory we have seen to depend on informal, qualitative, political judgments. Unfortunately, we have also seen a steady pattern of expert reliance on technical procedures even when they were manifestly unsuited to the task. The experts seem so intent on excluding informal thought that they would prefer even a bad quantitative process to a qualitative one