Neglect of probability

Type of cognitive bias

The neglect of probability, a type of cognitive bias, is the tendency to disregard probability when making a decision under uncertainty and is one simple way in which people regularly violate the normative rules for decision making. Small risks are typically either neglected entirely or hugely overrated. The continuum between the extremes is ignored. The term probability neglect was coined by Cass Sunstein. There are many related ways in which people violate the normative rules of decision making with regard to probability including the hindsight bias, the neglect of prior base rates effect, and the gambler's fallacy. However, this bias is different, in that, rather than incorrectly using probability, the actor disregards it. "We have no intuitive grasp of risk and thus distinguish poorly among different threats," Dobelli has written. "The more serious the threat and the more emotional the topic (such as radioactivity), the less reassuring a reduction in risk seems to us." Baron (2000) suggests that the bias manifests itself among adults especially when it comes to difficult choices, such as medical decisions. This bias could make actors drastically violate expected utility theory in their decision making, especially when a decision must be made in which one possible outcome has a much lower or higher utility but a small probability of occurring (e. g. in medical or gambling situations). In this aspect, the neglect of probability bias is similar to the neglect of prior base rates effect. Cass Sunstein has cited the history of Love Canal in upstate New York, which became world famous in the late 1970s owing to widely publicized public concerns about abandoned waste that was supposedly causing medical problems in the area. In response to these concerns, the U. S. federal government set in motion "an aggressive program for cleaning up abandoned hazardous waste sites, without examining the probability that illness would actually occur," and legislation was passed that did not reflect serious study of the actual degree of danger. Furthermore, when controlled studies were publicized showing little evidence that the waste represented a menace to public health, the anxiety of local residents did not diminish. One University of Chicago study showed that people are as afraid of a 1% chance as of a 99% chance of contamination by poisonous chemicals. In 2016, Rolf Dobelli presented a choice between two games of chance. In one, you have a one in 100 million chance of winning $10 million; in the other, you have a one in 10,000 chance of winning $10,000. It is more reasonable to choose the second game; but most people would choose the first. For this reason, jackpots in lotteries are growing.

Cass Sunstein has noted that for a long time after 9/11, many people refused to fly because they felt a heightened sense of fear or peril, even though, statistically, most of them "were not at significantly more risk after the attacks than they were before." Indeed, those who chose to drive long distances instead of flying thereby put themselves at an increased risk, given that driving is the less safe form of transportation.

In a 2001 paper, Sunstein addressed the question of how the law should respond to the neglect of probability. He emphasized that it is important for government to "create institutions designed to ensure that genuine risks, rather than tiny ones, receive the most concern". While government policies in regard to potential dangers should focus on statistics and probabilities, government efforts to raise public awareness of these dangers should emphasize worst case scenarios in order to be maximally effective. Moreover, while it seems advisable for government to "attempt to educate and inform people, rather than capitulating to unwarranted public fear", that fear will remain a real phenomenon and may thus cause serious problems, for example leading citizens to undertake "wasteful and excessive private precautions". In such cases, certain kinds of government regulation may be justified not because they address serious dangers but because they reduce fear. At the same time, government should "treat its citizens with respect" and "not treat them as objects to be channeled in government's preferred directions", so focusing on worst case scenarios that feed on irrational fears would amount to "unacceptable manipulation". In a 2003 article, however, Sunstein concluded that "As a normative matter, government should reduce even unjustified fear, if the benefits of the response can be shown to outweigh the costs."