INTRODUCTION
There is a major disagreement among scientists on the dangers posed by carbon pollution, just as the tobacco industry has always disputed the science to keep smokers addicted. Similarly, technology industries are creating overreaction to fearsome environmental risks. However this overreaction is not only restricted to the technology industries but is also prevalent in many other industries. Not only industries but the government and its people also often fall victim to such overreactions.
The paper discusses about cases of overreaction towards various facets of life like climate change, pollution, terrorism etc. and the factors resulting in overreaction and emphasizes the fact that the need of the hour is to be wise, rational and be aware of the truth.
PROBLEM[/b]
Fearsome risks are those that stimulate strong emotional responses such as fear and anxiety. Such risks which usually are expected to involve high consequences tend to have extremely low probability of occurrence. Through this paper I intend to show that how people often exaggerate the benefits of preventive measures in the face of fearsome risk and ignore the opportunity cost of undertaking such measures. In both personal and professional life, the result is damaging overreactions to risks.
In simple words, people overreact to fearsome risks even when the probability of occurrence for that event is extremely low. This results in undertaking excessive preventive actions. Consequently we end up giving up too much to avoid such risks. This will be true in case of governments and corporations as well as individuals.
ROLE OF EMOTIONS[/b]
Although emotions are not assessed independently but they do play a major role on judgment and decision making of a human being. People may reflect two kinds of behaviour: risk-averse or risk-inclined. Risk averse people are the ones who will look for the possibility of escaping the consequences and thus will show their overreaction by undertaking preventive measures. Emotions play a significant role in the decision making of both risk averse as well as risk inclined people.
For example, those who buy lottery tickets often fantasize about the prize associated with a lucky outcome. But with respect to risks of harm, risk averse people become panic and look for measures which can prevent the expected consequences.
The key is to be rational in your approach to decision making. The decisions should rest on the pillars of knowledge, understanding, unbiasedness and mental balance.
FEAR OF WORST CASE[/b]
When it comes to risk, a key question is whether people can imagine or visualize the “worst case” outcome. And if they can then how valid is that outcome. In this I will discuss about the validity of the response to the tragic situations quoting some real life examples.
After some bomblast people fear of going to the same place again in the near future. The best real life example would be in the immediate aftermath of the terrorist attacks on Washington, DC and New York City on September 11, 2001, people became exceedingly frightened. They were especially afraid to fly. New security measures were also imposed at airports in response to the attacks. There was a significant reduction in flying. One simple reason was fear[/b]. During those days people preferred other means of transport or preferred staying at home rather than flying.
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On 13th Sept. 2008, Saturday, the major places like Connaught Place, Karol Bagh, Greater Kailash.-1 and Central Park in Delhi were targeted by the Indian Muzzahuddin and the 5 serial blasts took 30 innocent lives and left 100 injured which made this day the black Saturday in Delhi. The attack thrilled the city and the people all over the city were in fear. These places were rendered so abandoned that they hardly made any footfalls for quite a few days. This not only affected the revenue of the shopkeepers in the respective places but also acted as a clear indication to the terrorists that anybody can stir the stability in the Capital.
Talking about the most recent terror attack in Mumbai on November 26, 2008. The tragic bomblast at the CST station caused the number of travellers to fall to a drastically low number. This shows how people overreact to such risks. Not only this the re-opening of the Hotel Taj was also done strategically involving Mr. Ratan Tata, founder of Tata industry, one who holds a different place in the hearts of Indians. This all was done so as to ameliorate such fears.
But the interesting fact is as a statistical matter, most people, in most places, were not at significantly more risk after the attacks than they were before. Second, substitution of other means of transport is likely to cause deaths, because other modes of transportation also do not guarantee you your life. Third, the costs of the new measures might well outweigh the benefits. Or there might be no benefits at all. Thus once monetized, the various costs are likely to be huge.
ROLE OF GOVERNMENT
The role of government is very important in case of such fears. Suppose that people are greatly concerned about a risk that has a small probability of occurrence – bridge collapse or flood. If government is confident about the facts, and if still people are concerned, should the government respond to their concerns? Or should it ignore them, on the ground of their being irrational?
Even if the fear is itself irrational, it might well be rational for people to take account of that fear. Like if I am afraid to fly, I might decline to do so, on the ground that my fear will make the experience quite dreadful. If the fear exists and I cannot eliminate it, the most rational decision might be not to fly.
It is predictable that in the aftermath of a terrorist attack, the public will not only alter its behaviour as quoted by the examples above but will also demand a substantial governmental response. That will be true even if the magnitude of the risk is extremely low and does not warrant such a response, and even if the danger is far less than that presented by other hazards that do not greatly concern people, perhaps because they do not get much public attention.
Widespread fear leads to a series of additional problems. It may cause reluctance to engaging in certain activities, such as flying on airplanes or visiting certain places. The resulting costs can be extremely high. It is important on the part of government to reduce fear just as it attempts to work for the welfare of people. But the question is how? The simplest answer here is government should inform and educate people rather than wasting resources on steps that will do nothing other than to reduce fear. In other words, when people are neglecting the fact that the probability of harm is small, government should generally attempt to inform people, rather than cater to their excessive fear But the simplest answer too is difficult to implement because information itself found is not perfect.
But when information will not help, government should analyse the situation and see whether the benefits outweigh the costs. If they do, then educate people along with a valid justification so as to convince them and reduce their fear. The key point here is that the decisions have to be taken with great attention as these involve important implication for both law and policy of the country.
OVERREACTION TO ENVIRONMENTAL RISKS
Talking about the global perspective of environment protection over the past years we have become increasingly concerned at the call of the climate alarmists which has led the governments of many countries to commit themselves to drastic reductions in carbon emissions without taking into consideration the economic cost of doing so.
Man-made increase in carbon dioxide concentrations has no doubt contributed to the global warming. But what remains a matter of unresolved dispute among climate scientists is the comparison of the contribution it has made with the natural factors affecting the earth’s climate.
The report of the Intergovernmental Panel on Climate Change (IPCC) suggested that most of the warming in the last quarter of the 20th century was very likely caused by man-made carbon dioxide emissions. These projections were made just before the acknowledgement that there had been no further global warming at all in the century so far – in spite of a continuing rapid rise in carbon emissions.
IPCC estimated the impact of the projected warming on the basis of two assumptions. The first is that while the developed world can adapt to warming, the developing world lacks the capacity to do so. The second is that even in the developed world, adaptive capacity is constrained by the limits of existing technology.
The first assumption as atleast majority of us would agree is certainly false. But even if it were true it calls for need to adopt tailor made aid programmes to ensure that the developing world did acquire the necessary adaptive capacity. The second is equally refutable given the ongoing developments in bio-engineering and genetic modification.
Given that warming produces benefits as well as costs, it is far from clear that for the people of the world as a whole, the currently projected warming, even if it occurs, would cause any net harm at all. By contrast, slowing down world economic growth, by shifting to much more expensive non-carbon sources of energy, would be massively costly. That is why the Copenhagen Summit did not reach its desired conclusion as global agreement to cut back drastically on carbon dioxide emissions, embracing China, India and the other major developing countries is still an issue which is under debate.[/b]
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CONCLUSION[/b]
This paper is written to fight against the risks that fear the society and that discourages us to take steps towards development. This is indeed a small contribution to understand the overreactions to fearsome risks and how these have caused or are causing hindrance in the progress of the world as a whole.
Overreaction to fearsome risks in the environment can come about for many reasons. Talking about the environmental risks, these are usually imposed unwillingly on external parties. Like in the case of Copenhagen Summit or any Summit related to environment protection, the developing countries are always suppressed by the developed countries to restrict the carbon emissions by elucidating reasons whose credibility is almost at stake. Also the government who has to kneel down in front of the society due to its fear is also one of the examples of imposition on the external party which could lead to undesired consequences. In such cases the government should not swiftly react even if the public is over enthusiastic about the problem and is showcasing excessive response to a problem. It should instead rely on the two key aspects as explained above: Information and Education. That is spreading information through education. But if public fear still remains high, the government should determine which measures can reduce it most cost effectively, almost in the spirit of looking for a solution that may do little for risk but do a lot to reduce fear.
In general, we overreact to some risks and ignore others which could play more important role. Often too much weight is placed on risks of low-probability but little effort is spent on preventing other risks. The need of the hour is to extensively look into the matter and prevent such steps because fear, when it is excessive, is itself a significant problem, and can create a series of additional significant problems. The wise decision can be made under the shades of knowledge, understanding, rationality and unbiasedness. But they themselves rest on the very important key called effective communication. The mental balance of the decision makers while making any decision is very important.
Not surprisingly in case where risks are high, people are likely to be insensitive to the extent of harm the problem could cause, particularly when their emotions are activated they are just concerned about the worst outcome that could occur and ignore the extent of harm it could cause. If something is harmful to us than it does not necessarily imply that it will not benefit us at all. In other words, benefit can be more than the cost to be incurred but as human beings are risk averse they overreact but sensible decisions need to be taken under such circumstances. Take the example of global warming, as said, it produces benefits as well as costs, there is no evidence that the currently projected warming would cause net harm to us. Thus, developed economy’s urge to developing ones to shift to much more expensive sources of energy would endanger their growth hence is rejected.
In a nutshell I would say if we visualize terrible outcome at the beginning only then we will be restricted to perform any action towards the problem at hand. The need of the hour is to tackle such overreactions so that we do not suffer any more losses or in other words we do not forego any more profits.