Life involves risk. Whenever you cross a road, ask someone for a date or try a new food, you’re taking a risk. Most of the time the risks are small and you barely notice them, or you think that they make life interesting; of course a life with no risk would be very dull indeed. Sometimes you make a decision to avoid risk: You put your savings in a low-interest bank account rather than investing them in shares. Sometimes risk can be paralysing, for example when people are unable to make a decision due to fear of missing out. Life involves risk, but not everyone is good at making risk decisions. Here are the most common mistakes that people – including you – are likely to make.
Mixing up frequency and likelihood. Millions more people die from heart disease and diabetes than are killed by strangers on the street, but you’re more likely to worry about walking home alone than eating a burger. This doesn’t (of course) mean you should deliberately wander down dark alleys late at night, but your lack of worry about the burger is a product of two mistakes.
First, you hear a lot more news headlines about murders than about diabetes, which makes you believe it’s more common. Second, it takes a lot of burgers to give you a heart attack but only one murderer to kill you, so the fact that heart disease is thousands of times more likely than homicide gets ignored. You don’t worry about having fast food today, and you don’t worry about it next week, and you don’t worry about it next year, until suddenly you’re in hospital. A low-risk activity can lead to high-risk problems if you do it often enough.
Worrying the most about the worst outcome. Surely it makes sense to worry most about the thing that could cause the most harm? Not necessarily. Just because something is catastrophic doesn’t mean you should allow it to influence your decisions. Yes, it would be horrible if terrorists targeted your home town and killed everyone you love. But unless you’re the hero of an action movie, it’s extraordinarily unlikely. Why would you even consider this? You probably wouldn’t, until a politician is asking you to vote for greater police powers in order to prevent terrorist attacks. You’ve got to compare the risk that the police might abuse their increased powers with the risk that you might lose all your loved ones; suddenly you find yourself focusing on the worst outcome. Don’t forget: awful isn’t the same as likely.
Using minimal information. Everyone does this to some extent. Maybe you don’t believe that smoking isn’t harmful just because your great-uncle John smoked and lived to be 98. Maybe you don’t assume that all men are rapists just because the news tells you about men who have raped. But you’ve probably made a decision about whether or not you like someone based on one short interaction. Maybe that person was having a bad day and if you’d made a different choice then you might have become good friends. Maybe they always behave that way; choosing not to spend time with someone who seems rude isn’t exactly a huge risk. But you need to admit to yourself that you do make decisions without all the information. Acknowledging this can help you reflect on your choices, especially important ones. The bigger the risk, the more you need to avoid guesswork and gut feelings.
Thinking that you’re being objective (when you’re definitely not). This happens in online echo chambers, where you only see and hear things that confirm your view of the world. But it happens in everyday situations too. Suppose your local news says there’s a scheme to build a sewage treatment plant in your neighbourhood. Two people read the story: a person planning on selling their house, and a water treatment worker who’s looking for a job closer to home. One of them thinks about the risk of falling property prices, the other thinks about the chance of local employment. Whenever you make a decision about risk, you’re doing it in the context of what you know and how you feel and whether it fits in with your other plans. That’s OK, everyone does the same thing, but don’t tell yourself you’re making an objective and dispassionate decision. Acknowledging your biases and motivations will help you make better choices.
You’re going to take risks for the rest of your life. Most of them will be small, like deciding whether to try a different place for lunch, but some will be huge, like deciding whether to move to another country. Whatever decision you’re making, remember that small frequent risks can be even more dangerous than huge, rare risks (and that just because something gets reported on the news doesn’t make it more likely). If you’ve got to judge between two risks, ask which is likeliest, not which is worse. Admit to yourself that you make decisions with poor information and that you’re not objective, and then use that insight to make better risk decisions in future.