RISK PERCEPTION The Psychology of Risk Taking Control in Pensions Planning 1999 3 May 1999 RISK PERCEPTION The Psychology of Risk Ortwin Renn University of Stuttgart and DIALOGIK gGmbH Draft 1

Taking Control in Pensions Planning 1999 3 May 1999 Risk Perception What Do We Know? Janus face – roman god of ambivalence/ambiguity Draft 1

Principles of Risk Perception Taking Control in Pensions Planning 1999 3 May 1999 Principles of Risk Perception Human behavior depends on perceptions, not on facts Perceptions are a well-studied subject of social science research: they differ from expert assessments, but they follow consistent patterns and rationales There are four genuine strategies to cope with threats: fight, flight, plying dead, experimentation Draft 1

Qualitative Risk Characteristics Taking Control in Pensions Planning 1999 3 May 1999 Qualitative Risk Characteristics with respect to the nature of risk: dread familiarity personal experience (perceptible by human senses) natural versus artificial risk source with respect to the consumption situation: voluntariness controllability fair distribution of risks and benefits confidence in risk management Draft 1

Five dominant risk perception clusters Taking Control in Pensions Planning 1999 3 May 1999 Five dominant risk perception clusters Emerging danger: randomness as threat Creeping danger: confidence or zero-risk Surpressed danger: myth of cycles Weighing risks: only with betting Desired risks: personal challenge Draft 1

Risk Cluster: Pending Danger Taking Control in Pensions Planning 1999 3 May 1999 Risk Cluster: Pending Danger Technical facilities with high disaster potential Very low probability that disaster will occur Little room for mitigation or personal action once the disaster has occurred (lack of agency) Randomness of occurrence : main threat Lowering probability of damage has no effect on acceptance Concerns may be lowered by reducing catastrophic potential or widening mitigation options Draft 1

Risk Cluster: Creeping Danger Taking Control in Pensions Planning 1999 3 May 1999 Risk Cluster: Creeping Danger Danger cannot be perceived by human senses Reliability on information by third party Long delay between exposure and outbreak of danger Key Variable Trust If trust is given: balance of risks and benefits If trust is not given: people demand zero risk If trust is contested: importance of peripheral cues Draft 1

Taking Control in Pensions Planning 1999 3 May 1999 Example: Novel Food Characteristics Complex risks and benefits Scientific uncertainty Benefit for consumer contested Possibility of mixing foods and drugs Problems Risks socially amplified Threat to traditional food knowledge and authority Potential for high social mobilization Draft 1

Perception of Novel Food Taking Control in Pensions Planning 1999 3 May 1999 Perception of Novel Food Public perception: Representative of Cluster: “Creeping danger” concern about long-term impacts (risks and benefits) Key variable trust: If yes: risk-benefit balancing If no: request for zero risk regardless of benefit If maybe: orientation on external criteria Decisive criterion: artificial or natural High sensibility for symbolic aspects of food (risks and benefits) Draft 1

Integrative Approach(Rohrmann/Renn) Taking Control in Pensions Planning 1999 3 May 1999 Integrative Approach(Rohrmann/Renn) Collective Influences Risk Perception Heuristics of Information Processing Heuristics Individual Common Sense Cognitive-Affective Factors Reference- knowledge Stigmata Personal beliefs Emotional affections Social-Political Institutions Social values and trust Economic & politial structures Organiza- tional constraints Personal values and interests Socio- eco- nomic status Media in- fluence Cultural Background Political, societal and economic culture Cultural institutions Worldviews Personal identity and sense of meaning Manifestations Four Context Levels of Risk Perception Draft 1

Taking Control in Pensions Planning 1999 3 May 1999 Summary People behave according to perceptions not facts Perceptions follow consistent patterns, but their expression may vary from culture to culture There are dominant perception clusters that govern the intuitive evaluation of risks Within the cluster of ´creeping dangers, trust and confidence in risk management are key to risk acceptance Policy making needs to address perceptions Draft 1

Taking Control in Pensions Planning 1999 3 May 1999 Quote: What man desires is not knowledge but certainty Bertrand Russel Science and scientific mediators cannot produce certainty but can help people to develop coping mechanisms to deal prudently with the necessary uncertainty that is required for societies to progress Draft 1