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Irrational Economist_ Making Decisions in a Dangerous World - Erwann Michel-Kerjan [64]

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time—trial-and-error learners will see few tangible rewards to their decisions to invest. As time evolves, the continued absence of positive feedback will further dampen instincts to invest—until, of course, a disaster serves to reactivate the perceived need. Many such oscillating investments in mitigation could be cited. When Hurricane Betsy flooded much of New Orleans in 1965, for example, the federal government was motivated to invest millions in a flood protection program. But as years passed without major storms, the returns on these investments became increasingly harder for both residents and legislators to see—an outcome that resulted first in the scaling back of the scope of the levee project, then in the deferment of investments in its maintenance. It took, of course, the disastrous floods of Hurricane Katrina in 2005 to reawaken policy makers to the risk faced by residents and businesses in the area, and to the area’s critical need for renewed investments in mitigation.

THE COMPOUNDING ROLE OF POOR MENTAL MODELS


While compelling in its simplicity, there is clearly more to the story of why we under invest in mitigation than the fact that we are often not directly rewarded for doing so. We might personally not see the direct benefits of mitigation on a day-to-day basis, but there is nothing, after all, that precludes personal learning from being supplanted by social learning. Communities might develop social norms for investing in protection, and foster “virtual memories” for catastrophic events through the retelling of history. A prominent sight along the Overseas Highway in the Florida Keys, for example, is a monument honoring the 500 residents and temporary workers who lost their lives during the great 1935 Labor Day Hurricane—a monument that doesn’t just commemorate their loss but also reminds current residents of the omnipresent threat posed by such storms. Likewise, even societies that lack the means of formal record keeping often keep memories of past catastrophes alive through story-telling and folklore. For example, the folk mythologies of almost all cultures include stories of great deluges or floods—mythical descriptions of what caused them, how they were survived, and how they might be avoided in the future.

Yet, this ability to “virtually” learn the wisdom of mitigation is a good thing only to the degree that the knowledge conveyed in simulated memories is objectively helpful. If individuals and/or societies have poor mental models of how and why natural hazards arise, then processes that reinforce these models would be decidedly counterproductive. As perhaps an extreme example, for generations farmers in the Henan province of China avoided consuming steamed bean soup (a dietary staple) for five days at the start of each year in the belief that doing so would help prevent floods—a superstitious belief that managed to persist despite having no grounding in scientific fact (see Thomas Schelling’s chapter in this book).

But the existence of misinformed mental models of hazards is hardly limited to developing societies. A good modern illustration is the lack of understanding among many residents in hurricane-prone areas about the role that storm shutters play in mitigating building damage. Their primary function is typically believed to be the reduction of damage resulting from broken glass—a relatively small impact that would seem to hardly justify their large cost. In reality, however, the true purpose of shutters is to protect the interior integrity of the house envelope, the rupture of which can amplify ceiling and roof damage—leading, in the extreme, to the complete collapse of the house itself. Residents who lack this knowledge would understandably be resistant to the installation of shutters; it would simply be hard to envision how the worst consequences of not having them would offset the large payment they’d need to make upfront.

A perhaps better-known example is the misperception that many have about how the probability of encounters with natural hazards varies over time. The likelihood

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