Skip to main content Accessibility help
×
Home

Responsible Precautions for Uncertain Environmental Risks

  • W. Kip Viscusi (a1), Joel Huber (a2) and Jason Bell (a2)

Abstract

Uncertain future risks pose cognitive and analytical challenges to household decision makers. Risks with uncertain probabilities, coupled with potentially severe outcomes pose problems for decision-making and are prone to overreactions. Imprecision in risk estimates generates behavioral distortions such as ambiguity aversion. This article presents new empirical results indicating household overvaluations of uncertain threats posed by several drinking water risks: traces of prescription drugs in drinking water, plastic water bottles with bisphenol-A, and the weed killer atrazine in drinking water. Negative reactions reflect responses to ambiguous risks, but policies driven by these concerns may misallocate regulatory resources due to risk conservatism and “no-regrets” responses.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Responsible Precautions for Uncertain Environmental Risks
      Available formats
      ×

      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Responsible Precautions for Uncertain Environmental Risks
      Available formats
      ×

      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Responsible Precautions for Uncertain Environmental Risks
      Available formats
      ×

Copyright

This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.

Corresponding author

References

Hide All
Adler, Jonathan, Crews, Clyde Wayne, Georgia, Paul, Lieberman, Ben, Melugin, Jessica, and Seivert, Mara-Lee. 2000. Greenhouse Policy without Regrets: A Free Market Approach to the Uncertain Risks of Climate Change. Washington, DC: Competitive Enterprise Institute.
Arrow, Kenneth J., and Fisher, Anthony C.. 1974. “Environmental Preservation, Uncertainty, and Irreversibility,” Quarterly Journal of Economics, 88(2): 312319.
Cameron, James, and Abouchar, Juli. 1991. “The Precautionary Principle: A Fundamental Principle of Law and Policy for the Protection of the Global Environment,” Boston College International and Comparative Law Review, 14(1): 127.
Dickey, Robert W. 2012. “FDA Risk Assessment of Seafood Contamination after the BP Oil Spill,” Environmental Health Perspectives, 120(2): a54a55.
Dudley, Susan E., Mannix, Brian F., Perez, Daniel R., and Carrigan, Christopher. 2019. “Dynamic Benefit-Cost Analysis for Uncertain Futures.Journal of Benefit-Cost Analysis, 10(2). doi: https://doi.org/10.1017/bca.2019.13.
Ellsberg, Daniel. 1961. “Risk, Ambiguity, and the Savage Axioms.” Quarterly Journal of Economics, 75(4): 643669.
Fischhoff, Baruch, Lichtenstein, Sarah, Slovic, Paul, Derby, Stephen L., and Keeney, Ralph L.. 1981. Acceptable Risk. Cambridge: Cambridge University Press.
Hamilton, James T., and Viscusi, W. Kip. 1999. Calculating Risks? The Spatial and Political Dimensions of Hazardous Waste Policy. Cambridge: MIT Press.
Interagency Working Group on Social Cost of Greenhouse Gases. 2016. Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis—Under Executive Order 12866. Available at https://www.epa.gov/sites/production/files/2016-12/documents/sc_co2_tsd_august_2016.pdf. (accessed May 13, 2019)
Intergovernmental Panel on Climate Change. 2014. Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Geneva: IPCC. http://ar5-syr.ipcc.ch/ipcc/ipcc/resources/pdf/IPCC_SynthesisReport.pdf.
Kahneman, Daniel, and Tversky, Amos. 1979. “Prospect Theory: An Analysis of Decision under Risk,” Econometrica, 47(2): 263292.
Kniesner, Thomas J. 2019. “Behavioral Economics and the Value of a Statistical Life,” Journal of Risk and Uncertainty, 58(2/3).
Krutilla, Kerry, Good, David H., and Graham, John D.. 2015. “Uncertainty in the Cost-Effectiveness of Federal Air Quality Regulations,” Journal of Benefit-Cost Analysis, 6(1): 66111.
Machina, Mark J., and Siniscalchi, Marciano. 2014. “Ambiguity and Ambiguity Aversion.” In Handbook of the Economics of Risk and Uncertainty, edited by Machina, Mark J. and Kip Viscusi, W., 729807. Amsterdam: Elsevier.
McMichael, Benjamin J., and Viscusi, W. Kip. 2014. “Shifting the Fat-Tailed Distribution of Blockbuster Punitive Damages Awards,” Journal of Empirical Legal Studies, 11(2): 350377.
Nordhaus, William D. 2007. “A Review of the Stern Review on the Economics of Climate Change,” Journal of Economic Literature, 45(3): 686702.
Siegel, Paul B., and Jorgensen, Steen L.. 2013. “Global Climate Change Justice: Toward a Risk-Adjusted Social Floor.” IDS working paper no. 426.
Sunstein, Cass R. 2003. “Beyond the Precautionary Principle,” University of Pennsylvania Law Review, 151(3): 10031058.
Stern, Nicholas. 2007. The Economics of Climate Change: The Stern Review. Cambridge: Cambridge University Press.
Taleb, Nassim Nicholas. 2007. Black Swan: The Impact of the Highly Improbable. New York, NY: Random House.
Viscusi, W. Kip. 1979. Employment Hazards: An Investigation of Market Performance. Cambridge: Harvard University Press.
Viscusi, W. Kip. 1988. “Irreversible Investments with Uncertain Benefit Levels,” Journal of Environmental Economics and Management, 15(2): 147157.
Viscusi, W. Kip. 1997. “Alarmist Decisions with Divergent Risk Information,” The Economic Journal, 107(445): 16571670.
Viscusi, W. Kip. 2018. Pricing Lives: Guideposts for a Safer Society. Princeton, NJ: Princeton University Press.
Viscusi, W. Kip, and DeAngelis, Scott. 2018. “Decision Irrationalities Involving Deadly Risks,” Journal of Risk and Uncertainty, 57(3); 225-252.
Viscusi, W. Kip, Magat, Wesley A., and Huber, Joel. 1987. “An Investigation of the Rationality of Consumer Valuations of Multiple Health Risks,” Rand Journal of Economics, 18(4): 465479.
Viscusi, W. Kip, and Zeckhauser, Richard J.. 2005. “Recollection Bias and the Combat of Terrorism,” Journal of Legal Studies, 34(1): 2755.
Viscusi, W. Kip, and Zeckhauser, Richard J.. 2011. “Deterring and Compensating Oil Spill Catastrophes: The Need for Strict and Two-Tier Liability,” Vanderbilt Law Review, 64(6): 17171765.
Weitzman, Martin L. 2011. “Fat-Tailed Uncertainty in the Economics of Catastrophic Climate Change,” Review of Environmental Economics and Policy, 5(2): 275292.
World Health Organization. 2003. Atrazine in Drinking-Water: Background Document for Development of WHO Guidelines for Drinking-Water Quality. Geneva: World Health Organization (WHO/SDE/WSH/03.04/32).
World Health Organization. 2011. Pharmaceuticals in Drinking Water. Geneva: World Health Organization.
Yakowitz, Sidney. 1969. Mathematics of Adaptive Control Processes. New York, NY: American Elsevier.

Keywords

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed