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Is fear rational? New joint research conducted by the Cornell Food and Brand Lab and the Laboratory for Experimental Economics and Decision Research shows a lack of correlation between fear and logic. Economists have traditionally viewed the risk-response as proportional to the peril at hand, while psychologists have contended that people have little control over their reaction to risk. This is because our feelings regarding risk are often not proportional, and instead fear-based. Is it more likely that you’ll be hurt in a plane crash, or on the car ride to the airport? Certainly the airport, but knowing that does not always relate to a reduced fear of flying. Cyanide in Tylenol bottles killed seven people in 1982, and the terrorist attacks of 9/11/2001 killed nearly 3000. Why, in a world where every year 30,000 people die in automobile accidents every year, do we so heavily invest in less-sensical preventative measures to promote public safety?
In order to resolve these contrasting perspectives, we review recent studies that blend behavioral economics and psychology. The answer is this: products, technologies and choices can sometimes become stigmatized, and that stigma is very hard to dissuade. This stigma can be the catalyst provoking a disproportionate psychological response which deems something as simply unacceptable. Stigma represents a misconception, a misperception of risk, an overreaction to something.
That was what researchers found in one study in which 87 participants were paid to consume water after watching a cockroach dipped into it. The cockroach had been sterilized in an autoclave. After seeing this, each participant was asked how much money they would have to be paid to drink the water. The researchers then offered to boil, filter and dilute the water.
With each offer of treatment, regardless of which treatment, the number of participants willing to drink the water increased as the cost they would charge decreased. With no treatments, the average minimum compensation was $3.70 per student. This number steadily decreased to $1.50 after four treatments. Again, it is important to note that that the water never posed a health risk and that the participants did not differentiate between the proposed treatments. They were responding entirely to their own internal disgust at the cockroach and the stigma regarding drinking the water. Providing multiple safety actions such as boiling, diluting, testing, and filtering cockroach-contaminated water progressively reduced stigma and, in turn, the compensation required to drink the water.
What's the lesson here? Fear is not always rational, and often is a response to stigma and disproportionate to the situation. So what? When you're afraid, think it through! Think about the real risk associated with your actions. You might find yourself too quick to say no to experiences that are worth having!
Article Summary by Margaret Sullivan
• Download paper from the SSRN (the Social Science Research Network)
William Schulze and Brian Wansink (2012). Toxics, Toyotas, and terrorism: The behavioral economics of fear and stigma. Risk Analysis, 32(4), 678-694. doi: 10.1111/j.1539-6924.2011.01748.x
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