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Responsible Precautions for Uncertain Environmental Risks

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  • Viscusi, W. Kip
  • Huber, Joel
  • Bell, Jason

Abstract

Uncertain future risks pose cognitive and analytical challenges to household decision makers. Risks with uncertain probabilities, coupled with potentially severe outcomes pose problems for decision-making and are prone to overreactions. Imprecision in risk estimates generates behavioral distortions such as ambiguity aversion. This article presents new empirical results indicating household overvaluations of uncertain threats posed by several drinking water risks: traces of prescription drugs in drinking water, plastic water bottles with bisphenol-A, and the weed killer atrazine in drinking water. Negative reactions reflect responses to ambiguous risks, but policies driven by these concerns may misallocate regulatory resources due to risk conservatism and “no-regrets” responses.

Suggested Citation

  • Viscusi, W. Kip & Huber, Joel & Bell, Jason, 2019. "Responsible Precautions for Uncertain Environmental Risks," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 10(2), pages 296-315, July.
    • Handle: RePEc:cup:jbcoan:v:10:y:2019:i:02:p:296-315_00
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    Cited by:

    1. James Broughel, 2020. "Cost-Benefit Analysis as a Failure to Learn from the Past," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 35(Spring 20), pages 105-113.

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