Risk Literacy

Risk assessment

More from John Brockman’s Edge question “What scientific concept would improve everybody’s cognitive toolkit?” by Gerd Gigerenzer, Psychologist; Director of the Center for Adaptive Behavior and Cognition at the Max Planck Institute for Human Development in Berlin; Author, Gut Feelings

Literacy — the ability to read and write — is the precondition for an informed citizenship in a participatory democracy. But knowing how to read and write is no longer enough. The breakneck speed of technological innovation has made risk literacy as indispensable in the 21st century as reading and writing were in the 20th century. Risk literacy is the ability to deal with uncertainties in an informed way.

Without it, people jeopardize their health and money and can be manipulated into experiencing unwarranted, even damaging hopes and fears. Yet when considering how to deal with modern threats, policy makers rarely ever invoke the concept of risk literacy in the general public. To reduce the chances of another financial crisis, proposals called for stricter laws, smaller banks, reduced bonuses, lower leverage ratios, less short-termism, and other measures.

But one crucial idea was missing: helping the public better understand financial risk. For instance, many of the “NINJAs” (no income, no job, no assets) who lost everything but the shirts on their backs in the subprime crisis didn’t realize that their mortgages were variable, not fixed-rate. Another serious problem that risk literacy can help solve are the exploding costs of health care.. Tax hikes or rationed care are often presented as the only viable alternatives. Yet by promoting health literacy in patients, better care can be had for less money.

For instance, many parents are unaware that one million U.S. children have unnecessary CT scans annually and that a full body scan can deliver one thousand times the radiation dose of a mammogram, resulting in an estimated 29,000 cancers per year.

I believe that the answer to modern crises is not simply more laws, more bureaucracy, or more money, but, first and foremost, more citizens who are risk literate. This can be achieved by cultivating statistical thinking.

Simply stated, statistical thinking is the ability to understand and critically evaluate uncertainties and risks. Yet 76 percent of U.S. adults and 54 percent of Germans do not know how to express a 1 in 1,000 chance as a percentage (0.1%). Schools spend most of their time teaching children the mathematics of certainty — geometry, trigonometry — and spend little if any time on the mathematics of uncertainty. If taught at all, it is mostly in the form of coin and dice problems that tend to bore young students to death. But statistical thinking could be taught as the art of real-world problem solving, i.e. the risks of drinking, AIDS, pregnancy, horseback riding, and other dangerous things. Out of all mathematical disciplines, statistical thinking connects most directly to a teenager’s world.

Even at the university level, law and medical students are rarely taught statistical thinking — even though they are pursuing professions whose very nature it is to deal with matters of uncertainty. U.S. judges and lawyers have been confused by DNA statistics and fallen prey to the prosecutor’s fallacy; their British colleagues drew incorrect conclusions about the probability of recurring sudden infant death. Many doctors worldwide misunderstand the likelihood that a patient has cancer after a positive screening test and can’t critically evaluate new evidence presented in medical journals. Experts without risk literacy skills are part of the problem rather than the solution.