The Fraser Institute

The Fraser Institute

December 12, 2007 08:00 ET

The Fraser Institute: Perceptions of Risk Often Skewed by Lack of Information and Context

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 12, 2007) - The public's perception of risk is often swayed by sensational news stories, glossy advertising, special interest group rhetoric, and a lack of context, says a news study on risk from independent research organization The Fraser Institute.

As a result, individuals often don't correctly understand the level of risk to themselves and their families.

"Risk perception is a personal and informal assessment of risk that is based on intuition, experience, and whatever information is at hand and it differs drastically from formal risk assessments undertaken by governments and other large institutions," said Mark Wolters, author of the study Real Risks: Statistical Thinking and Risk Perception.

"The problem we face is that our sometimes irrational, individual responses to a perceived risk can lead to poor public choices, with negative consequences for society."

A PhD candidate in the Department of Statistical and Actuarial Sciences at the University of Western Ontario, Wolters shows how individuals need to be more critical of the messages they receive about risks and to ensure the information they receive is put in the correct context before they make decisions.

"Consumers should expect that the appropriate context for interpretation of risk will often be absent. When they receive messages about potential risks, they need to recognize that vital information will often be missing."

Wolters is critical of the news media for a trend that sees increasing reporting on health and scientific studies where the primary focus is on the conclusions, with little or no concern for how valid they might be or what limitations might exist on their application.

"Unfortunately, the media typically report too little about the processes and context behind the headlines," he said.

"This is not objective reporting; it is an incomplete account that burdens the individual with interpreting the information without knowledge of its validity or limitations."

Wolters points to nuclear power as one example where the public perception of risk does not align with the statistical reality. Despite expert assurances that nuclear power is extremely safe, many people remain opposed to it, ostensibly because the technology is conceptually connected to radiation and to nuclear weapons, and because high-profile disasters such as Three-Mile Island and Cherynobyl suggest a potential for future catastrophes.

"These connections inspire fear, which powerfully influences perceived risk. Because the average person does not understand the physics behind the issues well enough to assuage their mistrust of the industry, the objective evidence supporting nuclear power has little effect on risk perception."

Wolters says people don't require an education in applied mathematics to make sense of the morass of risk-related statistics available to consumers. Rather, they need to consider two major concepts when trying to assess actual risk:

- Understanding the process by which the information is collected; and

- Presenting conclusions drawn from the data in an appropriate context (conclusions reported out of context are frequently misleading).

When assessing risks, consumers need to ask themselves how the information on the risks was generated and reported; how will they be exposed to these risks; how will the risks vary according to their behaviour; and how can they compare other risks to the risks in question.

"Risk perception will continue to be determined by values, fears, and other influences, some rational, some irrational," Wolters said.

"But through questioning the processes and by putting information into context, by considering risks in the context of other risks, individuals can try to make sure that their perception of risk is not amplified by a misinterpretation of the facts."

The Fraser Institute is an independent research and educational organization with offices in Calgary, Montreal, Tampa, Toronto, and Vancouver. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit www.fraserinstitute.org.

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