Our intuitions can lead to both too much and too little concern with low-probability risks. When judgments are based on analysis, they are more likely to be accurate, certainly if the analysis can be trusted. But for most people, intuitions rooted in actual experience are a much more powerful motivating force. An important task, for individuals and institutions alike, is to ensure that error-prone intuitions do not drive behavior.
What lessons follow from an understanding of the extraordinary success of the Montreal Protocol and mixed picture for the Kyoto Protocol? Since we have only two data points here, we must be careful in drawing general conclusions. But two lessons seem both important and indisputable.
The first is that public opinion in the United States greatly matters, at least if it is reflected in actual behavior. When ozone depletion received massive attention in the media, American consumers responded by greatly reducing their consumption of aerosol sprays containing CFCs. This action softened industry opposition to regulation, because product lines containing CFCs were no longer nearly as profitable. In addition, market pressures from consumers spurred technological innovation in developing CFC substitutes. In the environmental domain as elsewhere, markets themselves can be technology-forcing. At the same time, public opinion put a great deal of pressure on public officials, affecting the behavior of legislators and the White House alike.
In Europe, by contrast, those involved in CFC production and use felt little pressure from public opinion, certainly in the early stages. The absence of such pressure, combined with the efforts of well-organized private groups, helped to ensure that European nations would take a weak stand on the question of regulation, at least at the inception of negotiations. In later stages, public opinion and consumer behavior were radically transformed in the United Kingdom and in Europe, and the transformation had large effects on the approach of political leaders there as well.
With respect to climate change, the attitude of the United States remains remarkably close to that of pre-Montreal Europe, urging regulators to “wait and learn”; to date, research and voluntary action rather than emission reduction mandates have been recommended by high-level officials. It is true that since 1990 the problem of climate change has received a great deal of media attention in the United States. But the public has yet to respond to that attention through consumer choices, and the best evidence suggests that most American citizens are not, in fact, alarmed about the risks associated with a warmer climate. American consumers and voters have put little pressure on either markets or officials to respond to the risk.
...The second lesson is that international agreements addressing global environmental problems will be mostly ineffective without the participation of the United States, and the United States is likely to participate only if the domestic benefits are perceived to be at least in the general domain of the domestic costs.
Objection 4: [Knightian] uncertainty is too infrequent to be a genuine source of concern for purposes of policy and law Perhaps regulatory problems, including those mentioned here, hardly ever involve genuine uncertainty. Perhaps regulators are usually able to assign probabilities to outcomes; and where they cannot, perhaps they can instead assign probabilities to probabilities (or where this proves impossible, probabilities to probabilities of probabilities). For example, we have a lot of information about the orbits of asteroids, and good reason to believe that the risk of a devastating collision is very small. In many cases, such as catastrophic terrorist attack, regulators might be able to specify a range of probabilities-say, above 0 percent but below 5 percent. Or they might be able to say that the probability that climate change presents a risk of catastrophe is, at most, 20 percent. Some scientists and economists believe that climate change is unlikely to create catastrophic harm, and that the real costs, human and economic, will be high but not intolerable. In their view, the worst-case scenarios can be responsibly described as improbable.
Perhaps we can agree that pure uncertainty is rare. Perhaps we can agree that, at worst, regulatory problems involve problems of “bounded uncertainty,” in which we cannot specify probabilities within particular bands. Maybe the risk of a catastrophic outcome is above 1 percent and below 10 percent, but maybe within that band it is impossible to assign probabilities. A sensible approach, then, would be to ask planners to identify a wide range of possible scenarios and to select approaches that do well for most or all of them. Of course, the pervasiveness of uncertainty depends on what is actually known, and in the case of climate change, people dispute what is actually known. Richard Posner believes that “no probabilities can be attached to the catastrophic global-warming scenarios, and without an estimate of probabilities an expected cost cannot be calculated.” A 1994 survey of experts showed an extraordinary range of estimated losses from climate change, varying from no economic loss to a 20 percent decrease in gross world product—a catastrophic decline in the world’s well-being.
If the argument thus far is correct, we need to ask why reasonable people endorse that principle. If precautions themselves create risks, and if no course of action lacks significant worst-case scenarios, it is puzzling why people believe that the Precautionary Principle offers real guidance. The simplest answer is that a weak version is doing the real work. The more interesting answer is that the principle seems to give guidance because people single out a subset of risks that are actually involved. In other words, those who invoke the principle wear blinders. But what kind of blinders do they wear, and what accounts for them? I suggest that two factors are crucial. The first, emphasized in Chapter 1, is availability; the second, which we have not yet encountered, involves loss aversion.
Availability helps to explain the operation of the Precautionary Principle for a simple reason: Sometimes a certain risk, said to call for precautions, is cognitively available, whereas other risks, including the risks associated with regulation itself, are not. For example, everyone knows that nuclear power is potentially dangerous; the associated risks, and the worst-case scenarios, are widely perceived in the culture, because of the Chernobyl disaster and popular films about nuclear catastrophes. By contrast, a relatively complex mental operation is involved in the judgment that restrictions on nuclear power might lead people to depend on less safe alternatives, such as fossil fuels. In many cases where the Precautionary Principle seems to offer guidance, the reason is that some of the relevant risks are available while others are barely visible.
...But there is another factor. Human beings tend to be loss averse, which means that a loss from the status quo is seen as more distressing than a gain is seen as desirable… Because we dislike losses far more than we like corresponding gains, opportunity costs, in the form of forgone gains, often have a small impact on our decisions. When we anticipate a loss of what we already have, we often become genuinely afraid, in a way that greatly exceeds our feelings of pleasurable anticipation when we anticipate some addition to our current holdings.
The implication in the context of danger is clear: People will be closely attuned to the potential losses from any newly introduced risk, or from any aggravation of existing risks, but far less concerned about future gains they might never see if a current risk is reduced. Loss aversion often helps to explain what makes the Precautionary Principle operational. The status quo marks the baseline against which gains and losses are measured, and a loss from the status quo seems much more “bad” than a gain from the status quo seems good.
This is exactly what happens in the case of drug testing. Recall the emphasis, in the United States, on the risks of insufficient testing of medicines as compared with the risks of delaying the availability of those medicines. If there is a lot of testing, people may get sicker, and even die, simply because medicines are not made available. But if the risks of delay are off-screen, the Precautionary Principle will appear to give guidance notwithstanding the objections I have made. At the same time, the lost benefits sometimes present a devastating problem with the use of the Precautionary Principle. In the context of genetic modification of food, this is very much the situation; many people focus on the risks of genetic modification without also attending to the benefits that might be lost by regulation or prohibition. We can find the same problem when the Precautionary Principle is invoked to support bans on nonreproductive cloning. For many people, the possible harms of cloning register more strongly than the potential therapeutic benefits that would be made unattainable by a ban on the practice.
Notwithstanding the similarities, the Montreal Protocol has proved a stunning success, and the Kyoto Protocol has largely failed. The contrasting outcomes are best explained by reference to the radically different approaches taken by the United States-by far the most significant contributor, per capita, to both ozone depletion and climate change. It is tempting to attribute those different approaches to the political convictions of the relevant administrations. But the Reagan administration, which pressed for the Montreal Protocol, was hardly known for its aggressive pursuit of environmental protection, and the Senate showed no interest in the Kyoto Protocol during the Clinton administration. The American posture, and hence the fate of the two protocols, was largely determined by perceived benefits and costs.
And:
The real problem with the Precautionary Principle, thus understood, is that it offers no guidance-not that it is wrong, but that it forbids all courses of action, including regulation. Taken seriously, it is paralyzing, banning the very steps that it simultaneously requires. If you accepted the strong version, you would not be able to get through a single day, because every action, including inaction, would be forbidden by the principle by which you were attempting to live. You would be banned from going to work; you would be banned from staying at home; you would be banned from taking medications; you would be banned from neglecting to take medications. The same point holds for governments that try to follow the Precautionary Principle.
In some cases, serious precautions would actually run afoul of the Precautionary Principle. Consider the “drug lag,” produced whenever the government takes a highly precautionary approach to the introduction of new medicines and drugs onto the market. If a government insists on this approach, it will protect people against harms from inadequately tested drugs, in a way that fits well with the goal of precaution. But it will also prevent people from receiving potential benefits from those very drugs-and hence subject people to serious risks that they would not otherwise face. Is it “precautionary” to require extensive premarket testing, or to do the opposite? In 2006, 50,000 dogs were slaughtered in China, and the slaughter was defended as a precautionary step against the spread of rabies. But the slaughter itself caused a serious harm to many animals, and it inflicted psychological harms on many dog-owners, and even physical injuries on those whose pets were clubbed to death during walks. Is it so clear that the Precautionary Principle justified the slaughter? And even if the Precautionary Principle could be applied, was the slaughter really justified?
Or consider the case of DDT, often banned or regulated in the interest of reducing risks to birds and human beings. The problem with such bans is that, in poor nations, they eliminate what appears to be the most effective way of combating malaria. For this reason, they significantly undermine public health. DDT may well be the best method for combating serious health risks in many countries. With respect to DDT, precautionary steps are both mandated and forbidden by the idea of precaution in its strong forms. To know what to do, we need to identify the probability and magnitude of the harms created and prevented by DDT-not to insist on precaution as such.
Similar issues are raised by the continuing debate over whether certain antidepressants impose a (small) risk of breast cancer. A precautionary approach might seem to argue against the use of these drugs because of their carcinogenic potential. But the failure to use those antidepressants might well impose risks of its own, certainly psychological and possibly even physical (because psychological ailments are sometimes associated with physical ones as well). Or consider the decision by the Soviet Union to evacuate and relocate more than 270,000 people in response to the risk of adverse effects from the Chernobyl fallout. It is hardly clear that on balance this massive relocation project was justified on health grounds: “A comparison ought to have been made between the psychological and medical burdens of this measure (anxiety, psychosomatic diseases, depression and suicides) and the harm that may have been prevented.” More generally, a sensible government might want to ignore the small risks associated with low levels of radiation, on the ground that precautionary responses are likely to cause fear that outweighs any health benefits from those responses—and fear is not good for your health.
And:
It has become standard to say that some nations are more precautionary, and more concerned about worst-case scenarios, than are others. European countries, for example, are said to be more precautionary than the United States. If the argument thus far is correct, this conclusion is utterly implausible. First, it is implausible empirically. Some nations take strong precautions against some risks, but no nation takes precautions against every risk. As we have seen, the United States has followed a kind of Precautionary Principle with respect to ozone depletion, and certainly with respect to terrorism, but not for climate change or genetic modification of food. The United Kingdom was not particularly focused on the worst-case scenarios associated with ozone depletion; but it closely attends to those scenarios in the context of climate change. France is not precautionary with respect to nuclear power, and it followed no strong Precautionary Principle with respect to Saddam Hussein. But on many issues of health and safety, France takes aggressive precautionary measures. No nation is precautionary in general; costly precautions are inevitably taken against only those hazards that seem especially salient or insistent.
For advocates of cost-benefit analysis, a particularly thorny question is how to handle future generations when they are threatened by worst-case scenarios. According to standard practice, money that will come in the future must be “discounted”; a dollar twenty years hence is worth a fraction of a dollar today. (You would almost certainly prefer $1,000 now to $1,000 in twenty years.) Should we discount future lives as well? Is a life twenty years hence worth a fraction of a life today? I will argue in favor of a Principle of Intergenerational Neutrality—one that requires the citizens of every generation to be treated equally. This principle has important implications for many problems, most obviously climate change. Present generations are obliged to take the interests of their threatened descendents as seriously as they take their own.
But the Principle of Intergenerational Neutrality does not mean that the present generation should refuse to discount the future, or should impose great sacrifices on itself for the sake of those who will come later. If human history is any guide, the future will be much richer than the present; and it makes no sense to say that the relatively impoverished present should transfer its resources to the far wealthier future. And if the present generation sacrifices itself by forgoing economic growth, it is likely to hurt the future too, because long-term economic growth is likely to produce citizens who live healthier, longer, and better lives. I shall have something to say about what intergenerational neutrality actually requires, and about the complex relationship between that important ideal and the disputed practice of “discounting” the future.
But at least so far in the book, Sunstein doesn’t mention the obvious rejoinder about investing now to prevent existential catastrophe.
Anyway, another quote:
Why was the Montreal Protocol so much more successful than the Kyoto Protocol? I shall suggest here that both the success in Montreal and the mixed picture in Kyoto were driven largely by decisions of the United States, based on a domestic cost-benefit analysis. To the United States, the monetized benefits of the Montreal Protocol dwarfed the monetized costs, and hence the circumstances were extremely promising for American support and even enthusiasm for the agreement. As we will see, the United States had so much to lose from depletion of the ozone layer that it would have been worthwhile for the nation unilaterally to take the steps required by the Montreal Protocol. For the world as a whole, the argument for the Montreal Protocol was overwhelming.
But careful analysis and economic rationality were not the whole story: The nation’s attention was also riveted by a vivid image, the ominous and growing “ozone hole” over Antarctica. Ordinary people could easily understand the idea that the earth was losing a kind of “protective shield,” one that operated as a safeguard against skin cancer, a dreaded condition.
From Sunstein’s Worst-Case Scenarios:
More (#2) from Worst-Case Scenarios:
More (#5) from Worst-Case Scenarios:
More (#4) from Worst-Case Scenarios:
More (#3) from Worst-Case Scenarios:
And:
Similar issues are raised by the continuing debate over whether certain antidepressants impose a (small) risk of breast cancer. A precautionary approach might seem to argue against the use of these drugs because of their carcinogenic potential. But the failure to use those antidepressants might well impose risks of its own, certainly psychological and possibly even physical (because psychological ailments are sometimes associated with physical ones as well). Or consider the decision by the Soviet Union to evacuate and relocate more than 270,000 people in response to the risk of adverse effects from the Chernobyl fallout. It is hardly clear that on balance this massive relocation project was justified on health grounds: “A comparison ought to have been made between the psychological and medical burdens of this measure (anxiety, psychosomatic diseases, depression and suicides) and the harm that may have been prevented.” More generally, a sensible government might want to ignore the small risks associated with low levels of radiation, on the ground that precautionary responses are likely to cause fear that outweighs any health benefits from those responses—and fear is not good for your health.
And:
More (#1) from Worst-Case Scenarios:
But at least so far in the book, Sunstein doesn’t mention the obvious rejoinder about investing now to prevent existential catastrophe.
Anyway, another quote: