Tag Archives: risk

Argument: Trump “is acting like a real estate developer”

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Want to understand the behavior of President Donald Trump? Megan McArdle suggests he is simply doing what a real estate development might do:

Because what you see on TV shows about house-flippers is, writ large, the nature of the whole business: To compete in a highly capital-intensive industry, almost everyone takes on a lot of debt. Like most real estate people, Trump loves debt — “There’s nothing like doing things with other people’s money,” he told a rally in 2016. “Because it takes the risk, you get a good chunk of it and it takes the risk.”…

That’s why the real estate business rewards a certain willingness to put everything you have on a long shot; if you can’t cheerfully take risks with horrific potential downsides, you need a different job. The best argument for this approach is that some problems can’t be solved any other way — if developers demanded steady, predictable incomes like the rest of us, most of America would still be farmland.

In its best form, the developer’s way of thinking can achieve the impossible — or at least what the more staid and methodical folks said was impossible. I opposed moving the U.S. Embassy to Jerusalem and was at best ambivalent about sticking with Kavanaugh, but I have to admit that the apocalyptic doom predicted by Trump’s opponents has so far failed to materialize, while the political gains were immediate, and large.

Then again, there’s a reason most of us don’t live like real estate developers, or want to. Bankruptcy is a sadly normal fact of life in the real estate business, which is why Trump can tout his extensive experience negotiating with creditors. The cost of gaining wins with big bets is that you never know when you might lose everything.

Analyzing behavior and motives from afar is a difficult task. Yet, this argument raises some interesting questions:

  1. Could an average American describe how a real estate developer operates? A few might be known to a broad number of people but I’m guessing many operate behind the scenes. And these developers can significantly effect communities.
  2. It would be interesting to know how the president polls among real estate developers. Would they proudly call him one of their own? Would they recognize the approach?
  3. Are there examples of other real estate developers who became political leaders? If so, did they act in similar ways?
  4. Is there a way to quantify or easily explain the amount of influence real estate developers have had in cities or places? Donald Trump was a big name developer: widely recognized, some degree of wealth, and a number of large buildings with his name on it. Yet, how much did he influence New York City or other locations?

 

Exploring why Americans think their children are at such risk

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Virginia Postrel summarizes a recent study looking at how Americans perceive the safety of children:

The researchers suspected that overestimating risk reflects moral convictions about proper parenting. To separate the two instincts, they created a series of surveys asking participants to rate the danger to children left alone in five specific circumstances: a 2 1/2 -year-old at home for 20 minutes eating a snack and watching “Frozen,” for instance, or a 6-year-old in a park about a mile from her house for 25 minutes. The reasons for the parent’s absence were varied randomly. It could be unintentional, for work, to volunteer for charity, to relax or to meet an illicit lover.

Because the child’s situation was exactly the same in all the intentional cases, the risks should also be identical. (Asked what the dangers might be, participants listed the same ones in all circumstances, with a stranger harming the child the most common, followed by an accident.) The unintentional case might be slightly more dangerous, because parents wouldn’t have a chance to make provisions for their absence such as giving the child a phone and emergency instructions or parking the car in the shade.

But survey respondents didn’t see things this way at all. “A mother’s unintentional absence was seen as safer for the child than a mother’s intentional absence for any reason, and a mother’s work-related absence was seen as more dangerous than an unintentional absence, but less dangerous than if the mother left to pursue an illicit sexual affair,” they write. The same was true for fathers, except that respondents rated leaving for work as posing no greater danger than leaving unintentionally. Moral disapproval informed beliefs about risks…

“People don’t only think that leaving children alone is dangerous and therefore immoral,” the researchers write. “They also think it is immoral and therefore dangerous. That is, people overestimate the actual danger to children who are left alone by their parents, in order to better support or justify their moral condemnation of parents who do so.”

This reminds me of the trolley problem. While it doesn’t deal with risk, it hints at how morality is involved in assessing situations. Good parenting today includes avoiding intentional absences (and even these can be ranked). Leaving a child for unintentional reasons is not so bad. Both are of equal risk – just as saving five lives in the trolley problem regardless of how it is accomplished – but not viewed the same.

Generally, we have difficulty these days estimating risk. Are we more in danger from a possible terrorist attack (limited risk) or getting into a car (one of the riskiest daily behaviors)? We don’t always assess situations rationally nor do we have all the information at our fingertips. I don’t know that the answer is to suggest we should be more rational all the time: this is difficult to do and may not even be desirable. In this particular case, it might be more prudent to explore where these ideas of morality come from and then work to alter those. Alas, this is also likely a lengthy task.

 

Should cities worry about “city-killer” asteroids?

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Big cities around the world have plenty of problems to face without considering “city-killer” asteroids:

This Earth Day, Tuesday, April 22, three former NASA astronauts will present new evidence that our planet has experienced many more large-scale asteroid impacts over the past decade than previously thought… three to ten times more, in fact. A new visualization of data from a nuclear weapons warning network, to be unveiled by B612 Foundation CEO Ed Lu during the evening event at Seattle’s Museum of Flight, shows that “the only thing preventing a catastrophe from a ‘city-killer’ sized asteroid is blind luck.”

Since 2001, 26 atomic-bomb-scale explosions have occurred in remote locations around the world, far from populated areas, made evident by a nuclear weapons test warning network. In a recent press release B612 Foundation CEO Ed Lu states:

“This network has detected 26 multi-kiloton explosions since 2001, all of which are due to asteroid impacts. It shows that asteroid impacts are NOT rare—but actually 3-10 times more common than we previously thought. The fact that none of these asteroid impacts shown in the video was detected in advance is proof that the only thing preventing a catastrophe from a ‘city-killer’ sized asteroid is blind luck. The goal of the B612 Sentinel mission is to find and track asteroids decades before they hit Earth, allowing us to easily deflect them.”

I assume the typical big city would claim this is a national or international problem rather than a problem single cities can tackle. American cities alone, while wealthy by global standards, would have a hard time finding resources and expertise to address this.

At the same time, shouldn’t major cities have plans in place for something like this? The planning might not be too different than planning for a possible nuclear bomb attack, the sort of attack in a place like New York City that keeps President Obama occupied. Given a few days or few hours of warning, what could be done? Or perhaps some of these strikes might simply be so large that cities can’t worry too much about one and just have to play the odds, particularly when compared to other possible issues like natural disasters or civil unrest which might happen more frequently.

Risk, reward as more complexity leads to new, more problems

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In discussing the recent fine levied about BP for the 2010 oil issue in the Gulf of Mexico, an interesting question can be raised: are events and problems like this simply inevitable given the growing complexity of society?

In 1984, a Yale University sociologist named Charles Perrow published a book called “Normal Accidents: Living with High-Risk Technologies.” He argued that as technologies become more complex, accidents become inevitable.

The more complex safety features that are built in, the more likely it is that something will go wrong. You not only add technical complexity more things to go wrong but you add a human element of complacency. The more often things don’t go wrong, the more likely it is that people think they won’t. The phrase for this is “normalization of deviance,” coined by Boston University sociologist Diane Vaughan, part of the team that examined the 1986 explosion of space shuttle Challenger.

“Normal accident” and “normalization of deviance” come to mind because 10 days ago, the oil company BP agreed to plead guilty to 12 felony and two misdemeanor criminal charges in connection with the 2010 explosion of the Deepwater Horizon drilling rig in the Gulf of Mexico. Eleven workers were killed and nearly 5 million barrels of oil (210 million gallons) poured into the Gulf over 87 days…

But it requires complex systems that will, at some point, fail. Politically, the government can only seek to explain those risks, try to minimize them with tough regulation and make sure those who take big risks have the means to redress inevitable failure.

If these sorts of events are inevitable given more complexity and activity (particularly in the field of drilling and extraction), how do we balance the risks and rewards of such activity? How much money and effort should be spent trying to minimize risky outcomes? This is a complex social question that involves a number of factors. Unfortunately, such discussions often happen after the fact rather than ahead of possible occurrences. This is what Nassim Taleb discusses in The Black Swan; we can do certain things to prepare for or at least think about known and unknown events. We shouldn’t be surprised that oil accidents happen and should have some idea of how to tackle the problem or make things better after the fact. A fine against the company is punitive but will it necessarily provide the solution to the consequences of the event or guarantee that no such event will happen in the future? Probably not.

At the same time, I wonder if such events are more difficult for us to understand today because we do have strong narratives of progress. Although it is not often stated this explicitly, we tend to think such problems can be eliminated through technology, science, and reason. Yet, complex systems have points of frailty. Perhaps technology hasn’t been tested in all circumstances. Perhaps unforeseen or unpredictable environmental or social forces arise. And, perhaps most of all, these systems tend to involve humans who make mistakes (unintentionally or intentionally). This doesn’t necessarily mean that we can’t strive for improvements but it also means we should keep in mind our limitations and the possible problems that might arise.

Driving today is much safer than in the past

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An article (“Safer Passage”) in the latest issue of Time has shows that the fatality rate from driving has dropped a lot over the years. Here is a description of the issue:

America’s roadways are safer than ever. The latest data show that traffic fatalities are at their lowest level since 1949 and that the death rate based on miles traveled is the lowest in history. But technologies such as active safety systems and advanced air bags are being offset by auto safety’s newest enemy: distracted drivers using electronic devices behind the wheel.

“We lost over 3,000 in 2010 to distraction-related crashes,” National Highway Traffic Safety Administration chief David Strickland says. “It’s a heightened risk to the public, and it’s growing exponentially.”

Some of the statistics cited in the story:

1. In 1950, there were 7.2 deaths per 100 million vehicle miles traveled. In 2010, the rate is 1.1. While Americans might be driving more on average today than in 1950 (I couldn’t find figures on this), the fatalities while driving has dropped nearly sevenfold.

2. Here is what causes traffic fatalities: 32% killed by drunk driving, 31% by speeding, 16% by distraction, and 11% by bad weather. It is interesting that much of the current debate about making driving safer deals with cell phones and distractions (see a recent article from the Chicago Tribune about new efforts in Illinois) while it is the third biggest threat. Perhaps policymakers could argue that getting rid of distractions if the cheapest or easier route compared to dealing with the first two issues.

3. According to this CDC report, there were 36,216 deaths in 2009 in motor vehicle accidents for a death rate of 11.8 per 100,000 Americans.

Americans seem willing to accept some risk in driving and generally welcome efforts to make cars safer. And the numbers have gone down quite a bit since 1950: driving is safer. At the same time, the fight over cell phones in cars is just heating up and we need more data to know whether cell phones are more distracting than other features found during driving (passengers, fiddling with the radio/GPS devices, talking to passengers, tiredness). In the end, this may be an odd costs-benefits tradeoff: restricting cell phone use may limit deaths but some will argue that too much is being given up (assuming that only others get in accidents while using cell phones?). Of course, one solution is to simply go to driverless cars but there are other hurdles to overcome there.

Sociologist/college president speaks about the American “culture of fear”

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Sociologist and college president Barry Glassner discusses his recent thoughts on the Culture of Fear in America:

Glassner, formerly the executive vice provost at the University of Southern California [and now president of Lewis & Clark College], has earned a reputation as a rational critic of dire news — whether it arises in media, political or popular circles. He says three out of four Americans report that they’re more afraid now than they were 20 years ago, and he’s kept track of how those fears have ebbed and flowed…

[Glassner speaking] We need to be careful to distinguish how people respond to fear mongering and who is spreading the fears. If we ask why so many of us are losing sleep over dangers that are very small or unlikely, it’s almost always because someone or some group is profiting or trying to profit by either selling us a product, scaring us into voting for them or against their opponent or enticing us to watch their TV program.

But to understand why we have so many fears, we need to focus on who is promoting the fears…

If I can point to one thing, it’s this: Ask yourself if an isolated incident is being treated as a trend. Ask if something that has happened once or twice is “out of control” or “an epidemic.” Just asking yourself that question can be very calming. The second (suggestion) is, think about the person who is trying to convey the scary message. How are they trying to benefit, what do they want you to buy, who do they want you to vote for? That (question) can help a lot.

The updated version of Glassner’s book has a great subtitle: “Why Americans Are Afraid of the Wrong Things: Crime, Drugs, Minorities, Teen Moms, Killer Kids, Mutant Microbes, Plane Crashes, Road Rage & So Much More.”

Glassner’s advice seem to be this: be skeptical when you hear someone trying to suggest that you should be fearful. This is good advice in a lot of circumstances as you don’t want to blindly believe what you hear but you don’t want to immediately reject everything either. The trick is that it requires one to actively think about what they hear, not just passively take it in, and also to have some knowledge about how to evaluate the information they hear. This process requires some skill and practice. I wonder if Glassner talks about who is best suited to help people – perhaps colleges?

Additionally, I would be interested to hear what Glassner says we should be scared about besides people who want us to be fearful.

One possible positive of higher gas prices: less deaths

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For the average American, driving or riding in a car is perhaps their most risky daily activity. So if gas prices go up (with the Chicago region leading the nation) and driving goes down, then less Americans may be killed on the road. This is according to a recent study of Mississippi data:

Traffic accidents seem to go down — even ones because of drunken driving — as gas prices go up.

“The results suggest that prices have both short-term and intermediate-term effects on reducing traffic crashes,” Guangqing Chi, assistant professor of sociology at Mississippi State University and demographer at Mississippi State’s Social Science Research Center, and colleagues wrote.

In their research, published in two recent studies in the Journal of Safety Research and Accident Analysis & Prevention, the researchers looked at car accidents in Mississippi between 2004 and 2008, and tracked gas prices during that period. The prices seemed to affect younger drivers the most in the short-term (over one month) and older drivers and men over a one-year period.

In addition, the investigators found a strong link between higher costs at the pump and a drop in frequency of drunken-driving crashes, they noted in a university news release.

This is data from one state so it would be interesting to see if such relationships hold in additional states.

But these arguments about safety in light of generally negative public opinion (regarding gas prices here) can provoke some contentious conversations. Some members of the public are bound to ask whether the government is most interested in safety or in revenue? The same issue has been raised with red-light cameras and I also ran into similar arguments about particular developments when doing research into the growth of nearby suburbs.

For the average American, would they rather have a higher risk while driving (which they probably don’t think about anyway) or lower gas prices? This seem easy to answer and I wonder if the safety argument will gain any traction at all.

Discussing acceptable risk and gun deaths

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One of the larger issues brought to light by the Arizona shootings is whether Americans want to risk the possibility of such an event occurring in the future. One commentator considers the trade-offs that might exist in limiting the risk of gun violence:

RealClearPolitics analyzed the most recent United Nation’s data to better understand American violence. The assault rate in Scotland, England, Australia and Germany is more than twice the US-assault rate, at times far more. Yet the US-murder rate is at least four times the rate of these developed nations. America’s murder rate ranks 53 among 153 nations. No other developed nation ranks within the top half. The comparison between assault and murder rates is rough; an assault is not always reported or discovered. Both rates are, however, based on criminal justice sources from 2003 to 2008. And the comparison, for all its imperfections, captures an important fact: Americans are not exceptional for their violence but exceptional for their extreme violence–murder.

American violence has known far worse days. In 2008, the national homicide rate reached its lowest level since 1965. But there are still about 12,000 gun related murders annually. Guns are involved in two-thirds of American homicides. The US firearm-murder rate ranks among third-world countries. It’s about ten times the rate of Western European nations like Germany…

There is an unspoken willingness to tolerate our share of murders. American hyper-capitalism makes a similar tradeoff. We subscribe to social Darwinism to a degree unseen in Western Europe. It’s one reason our economy is the fittest. But it also explains why the wealthiest nation in the world has a weaker social safety net than other developed countries. The conservative equation of freedom: lower taxes and fewer regulations on guns, equals more freedom. Liberals adhere to their own zealous formulation of American freedom. The left has won more civil rights for the mentally ill, but those rights will sometimes risk the public’s welfare.

This is an interesting take on the situation. Whose rights should be protected? Are we willing to risk similar events occurring?

Considering the relative risks might also be helpful. Gun deaths, particularly like those lives taken in Arizona, seem particularly tragic and sudden. In comparison, over 33,000 Americans died in motor vehicle accidents in 2009. Which is the bigger priority: limiting gun deaths or motor vehicle accidents. These sorts of questions are quite difficult to answer and often don’t seem to be part of national conversations.

[Another note: can we really say that “our economy is the fittest”? One index recently named Hong Kong the world’s “freest economy.”]

[A final question: is it strange that this particular violence occurrence is getting so much attention when there are 12,000 gun deaths a year in the United States? I’m reminded of the talk in Chicago in recent years about whether the deaths in poorer neighborhoods were receiving the attention they should from police and politicians.]