Finding the true meaning of risk

Interpretation as Risk

The New Scientist has an important article by Nicolas Bouleau, Issue 2818, 25 June 2011, pg 30.

Whether it’s a shape, a structure or a work of art, once you see a meaning in something, there’s no going back. The reasons why run deep.

… the assertion that a particular phenomenon is “random” is neither trivial nor obvious and, except in textbook cases, is the subject of debate.

This ..  irreversibility of interpretation … holds quite generally: once you perceive something in the world – a shape, structure or a meaning – you can’t go back. …

All this is crucial to truly understanding risk. The belief some people have that risks can be objectively measured means expunging their interpretative aspect, even though that aspect is an essential part of understanding risk. From the epistemic point of view, it is the meaning of the event that determines the risk. The probabilistic representation … is too simplistic.

Usually there isn’t enough information for such a model: we do not know the probabilities of rare events occurring since there will never be enough data, we do not have a full description of what can happen, and we do not know how to calculate the cost of that event occurring.

….

The bottom line – quite literally, sometimes – is that to really understand risk, we have no choice but to take account of the way people interpret events.

Comments

The conclusion seems sound, but

  • I am not sure that it is useful to imagine that anything really ‘is’ random or meaningful: these are in the eye of the beholder.
  • When abroad I often see things that appear random to me but which I believe to be meaningful to the locals.
  • The article is full of disparaging remarks about how ‘people’ make sense of things without considering whether this is cultural or biological, for example, and what might be done to correct or compensate for them. A link to behaviourist economics would be interesting.
  • The piece de resistance is a similar pair of figures. The intention is that the first initially looks random, but after looking at the second and seeing words picked out in colour one looks at the first figure and sees words. The assertion is that ‘people’ cannot suppress the autonomous ‘sense making’. But some can.

Selecting for ‘Negative Capability’

To me, the significance is not so much about the nature of risk (which aligns with Keynes, for example) but about the reasons why people are blind to risk: because once they ‘see’ how the economy (or whatever) works they are unable to ‘see’ any other possibility. The implication seems to be that the blindness here is the same kind as in the optical example. If so, maybe we should use the optical example (or other colour-blindness tests) to select those with Keats’ ‘negative capability’ for roles that need to ‘see’ risk. But is it really so?

See also

Search my blog for uncertainty, risk or crisis.

Dave Marsay

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About Dave Marsay
Mathematician with an interest in 'good' reasoning.

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