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Global Risk Regulation
Alberto Alemanno
HEC Paris
Setting the scene
A few words on:
- course format
- teaching method
- syllabus + readings
- evaluation
Tour de table
Global Risk Regulation Alberto Alemanno HEC Paris Setting the - - PowerPoint PPT Presentation
Global Risk Regulation Alberto Alemanno HEC Paris Setting the - - PowerPoint PPT Presentation
Global Risk Regulation Alberto Alemanno HEC Paris Setting the scene A few words on: course format teaching method syllabus + readings evaluation Tour de table Global Risk Regulation Alberto Alemanno HEC Paris More a
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Global Risk Regulation
Alberto Alemanno
HEC Paris
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More a collection of narratives than a conventional course
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it consists of a set of stories that can be read in isolation
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yet
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a fuller reading show that these stories are tight together
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under the label of « Global Risk Regulation »
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risk regulations
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i.e.
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regulations aimed at protection public health, safety and the environment.
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regulations aimed at protection public health, safety and the environment.
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regulations aimed at protection public health, safety and the environment.
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regulations aimed at protection public health, safety and the environment.
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regulations aimed at protection public health, safety and the environment.
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regulations aimed at protection public health, safety and the environment.
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Let’s zoom in
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Structure of the course
Theorethical foundations of RR:
Introduction to risk theories Terminology & scoping Case study: BPA
Regulating risk under the WTO’s supervision
EU Risk regulation (vs US Risk regulation) WTO as a risk regulator Case study: GMOs
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Structure of the course (2)
Optimization tools of risk regulation
Risk analysis/Economic analysis Case studies: Volcanic as
hes
New Frontiers of global risk regulation:
Lifestyle risks Case studies: plain packaging/nudges
Final comments
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case studies
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Bisphenol A
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Volcanic ash cloud - Eyjafjallajokul
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Plain Packaging
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Australia PP
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US new packs (22.09.2012)
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Nudges
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Front row
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We live in strange times
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The world has never been a safer place:
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life chances indicators: healthier
live longer smarter bigger wealthier
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yet
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Humans never been so fearful about: Injury Disease Death
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‘Risk Paradox’
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“ How ext r aor di nar y! The r i chest , l ongest - l i ved, best pr ot ect ed, m
- st
r esour cef ul ci vi l i zat i on, wi t h t he hi ghest degr ee of i nsi ght i nt o i t s
- wn t echnol ogy, i s on i t s way t o
becom e t he m
- st f r i ght ened” .
Ar on W i l davsky, No Ri sk i s t he Hi ghest Ri sk of Al l , 67 Am er i can Sci ent i st 32, 32 ( 1979) .
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The ‘fear of the month’
Do cell phones cause brain cancer? What about wi-fi? or MP3 players? High doses of vitamins? Mercury in fish? GMOs? Nanotechnologies? Will the next flu become a pandemia?
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Why so?
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Are we facing more risks than in the past? Are we facing the same amount but we are less
tolerant to risks that were accepted as unavoidable a few decades ago?
Are then individuals’ expectations of security that
explains such an apparent paradox?
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some explanations in
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risk theories
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Systems theory
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Systems theory
Luhmann:
Social threats have not increased in terms of life lost Social systems internalized external threats
DANGERS transformed into RISKS
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Reflexive modernization
Beck/Giddens :
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Reflexive modernization
Beck/Giddens :
Not increased of social threats but systems, not
individuals, create risks
We live in a « Risk Society » Crisis of meta-rationality of modernity and
disenchantement:
More choices less orientation Competing knowledges Negative sides of modernisation
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Cultural theory
Douglas/Wildavsky
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Cultural theory
Douglas/Wildavsky: Risk as ‘social constructs’ Risk not determinable by scientific
analysis, but via the:
beliefs interests and values of each group
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Post-modernism
Focault
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Post-modernism
Focault:
No universal rationality Any knowledge claim is interest-driven and tool for
manipulation:
Disguised under scientific rationale, you coerce
people to accept nuclear power, GMOs, nanotech, etc
« Decision frame » makes the difference as well as «
Trust », i.e. ability to persuade people w/o evidence
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Psychologycal theory
- Tversky-Kahneman
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Psychologycal theory
Risk cannot be reduced to probability and
consequences
Systematic errors in thinking when people face
uncertainty
These errors due to the ‘design of the
machinery of cognition’ rather than the corruption of thought by emotion
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Rational choice
Most popular in economic thinking & regulation:
YES universal rationality:
Maximization of individual utility Distinction btw ends and means
easier to predict human actions when
preferences known
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2 questions for you
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Renn: author of taxonomy
A neutral observer or does he belong to a risk family?
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The legal vision of risk
Which is the risk theory more embedded into the legal system?
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Risk theories
contribute to our understanding of risk will appear along our future discussions provide some explanation to the risk paradox
common, conflicting, complementary answers
evidence of more pluralistic societies in terms of values,
lifestyle and knowledges systems
- ften competing among each other
hence the challenge to govern risk
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What is a risk?
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Let’s identify your daily risk(s)
1.
Since this morning …. until tonight
1.
Brain storming
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Quick sum up
Risk is inherent to any human process and
risk-free situations just do not exist
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Let’s identify your daily risk(s)
1.
Since this morning …. until tonight
1.
Brain storming
2.
Should we regulate them?
1.
Do they look the same? Taxonomy challenge
2.
If needed, who should do that?
3.
and how? Brain storming
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- 1. What is a risk?
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Terminology in Risk studies
Not a semantic issue, but often A theoritical demarcation
E.g. Luhmann: dangers vs risks
Optional reading by Kaplan et al.
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Definition of risk
Risk = Likelihood of occurrence x Seriousness if incident occurred
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2
How to decide whether (or not) to regulate ‘the fear of the month’?
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3
How to regulate ‘the fear of the month’?
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Rationality & Scientific Truth
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Public Knowledge
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expertise vs ordinary people’s judgment
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How people deal with risks?
Relevant question for risk regulators
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11/09
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How US citizens assessed and managed 11/09 risk?
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they gave up flying and drove instead: shift in probability of accidents 1/1 000 000 vs 1/6 000
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11/09
Fine, if one people does it (faces safety gap) but What if whole society? Shift lasted 1 year: 1,595 US citizens paid the price, but nobody noticed it
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Availability heuristic
People assess the probability of an event by
seeing whether relevant examples are cognitively ‘available’
Several examples:
Plane crash Natural disaster & insurance policy
Important idea in understanding cognitive
distorsions likely to occurr in our perception
- f hazards
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- ther examples of how people assess the
presence and magnitude of risks
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What kill the most in the US?
Guns
- r
Flu ?
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What kill the most in the US?
Obesity Guns Terrorism Pandemics Tobacco Flu Unclean water
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What kill the most in the US?
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What kill the most in the EU?
Obesity Guns Terrorism Pandemics Tobacco Flu Unclean water
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What kill the most in the EU?
Obesity Guns Terrorism Pandemics Tobacco Flu Unclean water
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What kill the most www?
Obesity Guns Terrorism Pandemics Tobacco Flu Unclean water
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What kill the most www?
Obesity Guns Terrorism Pandemics Tobacco Flu Unclean water
(2 000 000)
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What scare you the most?
HIV GMO Unpasteurized cheese Climate change
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What scare you the most?
HIV GMO Unpasteurized cheese Climate change
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What scare you the most?
HIV GMO Unpasteurized cheese Climate change
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What scare you the most?
HIV GMO Unpasteurized cheese Climate change
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What scare you the most?
Climate change HIV GMO Unpasteurized cheese
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Another cognitive bias
How many African Nations in the UN?
More of less than 10%?
(average answer 25%)
More or less than 65%?
(average answer 45%)
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Anchoring
the common human tendency to rely too heavily,
- r "anchor," on one trait or piece of information
when making decisions When individuals overly rely on a specific piece
- f information to govern their thought-process: A
person begins with a first approximation (anchor) and then makes incremental adjustments based
- n additional information
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these mental shortcuts
are generally called
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Cognitive biases
A cognitive bias is a pattern of deviation in judgment
that occurs in particular situations
In particular,they consist in many distortions in the
human mind that are difficult to eliminate and that lead to perceptual distortion, inaccurate judgment, or illogical interpretation
Studied for how they affect belief formation, business
decisions, and scientific research
Cognitive biases are instances of evolved mental
behavior
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Cognitive biases II
Availability heuristics/probably neglect Anchoring - the common human tendency to rely too heavily,
- r "anchor," on one trait or piece of information when making
decisions
Loss aversion/endowment effect – A loss from the status quo
perceived as more undesiderable than a gain is seen as desirable
Intuitive toxicology and « affiliation bias » Informational cascades Group polarization/Confirmation bias - a tendency for people
to favor information that confirms their preconceptions regardless of whether the information is true
Zero-risk bias – preference for reducing a small risk to zero
- ver a greater reduction in a larger risk.
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to learn more
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to learn more (2)
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Lessons learned
Much what we think about risk does not make
sense:
Trend to overestimate highly publicized causes of
death (cancer, tornados, homicides) and underestimate more common sources of death (stroke, asthma, botulism, influenza)
Overestimate death from accidents and
underestimate deaths from disease
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Lessons learned (2)
Cognitive biases
overegulation? bad regulation?
Cultural dimension:
Scared about different things
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Lessons learned (3)
Who suffers from people’s use of cognitive
biases?
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Lessons learned (3)
Who suffers from people’s use of cognitive biases?
Ordinary people’s only or also policy-makers? If both, gov’t policies reactive to public alarm Good or bad? Risk that ressources used where less need… In sum, everybody can loose unless…we can turn these
biases to our favour
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Slovic’s stance against technocracy
Although vulnerable to cognitive biases,
- rdinary people make ‘valuable’ judgments:
Risk means more than ‘expected n of fatalities’
(turn slide)
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Comparing risks
If you drive a car 4 000 miles; smoke 100 cigarettes; rock climb for 2 hours; work in the chemical industry for a year
the risk to life is the same
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YET that’s NOT our perception
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Slovic’s ‘psychometric paradigm’
Richer judgment, reflecting whether is:
Dreaded (cancer vs other disease) Potentially catastrophic Inequitably distributed Involuntary Incontrallable New Faced by new generations Ordinary people’s judgment as ‘Rival Rationality’? Technocrats miss the point (yet Sunstein unconvinced)
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Slovic: ‘Rival rationality’? Margolis/Sunstein:
Experts know the facts, ordinary people don’t: both cost and benefits are on screen Often people see risks but not benefits and as soon as they learn benefits …
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Case study
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BISPHENOL A (BPA)
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chemical (monomer) used in tiny amounts in the production of
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Baby bottles
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Food cans
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Plastic bottles
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Plastic goggles
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Face shields
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Composites/sealants
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BPA used since 1930s
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Concern
to migrate in small amounts into foods and beverages stored in BPA-made containers & suspected of causing breast and prostrate cancer, diabetes, hyperactivity and other serious disorders in laboratory animals …
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The Science
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Virtually all food safety bodies across the globe have held that the substance poses no risk to human health at current exposure rates but emergence of new studies !
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New studies show
potential effects of BPA on the brain, behavior, and prostate gland in fetuses, infants, and young children
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“some concern about the potential effects of BPA
- n the brain, behaviour and prostate gland in
foetuses and young children” January 2010
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EFSA, based on literature review, does not consider the currently available data as convincing evidence that BPA has any adverse effects on aspects of behaviour, such as learning and memory
September 30, 2010
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EFSA maintains its original 2006 opinion establishing a full Tolerable Daily Intake (TDI) of 0.05 mg BPA/kg body weight
The TDI is an estimate of the amount of a substance, expressed on a body weight basis, that can be ingested daily over a lifetime without appreciable risk.
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What would you do?
Let’s suppose that you’re a consumer Let’s suppose that you’re a producer of plastic bottles Let’s suppose that you’re a user of plastic bottles Let’s suppose that you’re a retailer Let’s suppose that you’re a politician
very different answers …
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(Our Daily) Cost-Benefit Analsyis ?
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The Law
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What about the US?
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Despite the concerns:
- BPA is still allowed on the market, but
- FDA is supporting a shift to a more robust
regulatory framework for oversight of BPA.
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What about the rest of the world?
Ban on importation, sale and advertising of
polycarbonate baby bottles in Canada
Few US States ban BPA in baby bottles
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In the meantime …
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And in the EU?
After some bans on BPA-baby bottles: and France has been considering warning label: « it conta ins BPA »
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What about the EU?
Ban on baby bottles
Directive 2011/8 of 28 January 2011
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Only on baby bottles
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Commission directive 2011/8/EU of 28 January 2011 amending directive 2002/72/EC as regards the restriction of use of Bisphenol A in plastic infant feeding bottles:
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Status quo
that’s where the Science and the Law of BPA stand today
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The challenge today is to decide a course of action before there is certainty about what it is truly dangerous and what is not
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In the meantime …
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The Plastic Panic - How worried should we be about everyday chemicals?
Read more at http://www.newyorker.com/
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the BPA case study epitomises the challenges of global risk regulation
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while making the choice
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Risk Perception & Public Knowledge
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Rationality & Scientific Truth
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we tend to overlook
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Benefits vs Ris ks
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Ris ks vs Ris ks trade-offs
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and rely on
precautionary approach
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The PP
does not provide guidance
- n what’s best
(exclusive focus on the hazard)
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Precautionary Principle
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As a result
it tends to overlook
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vs vs Ris ks
(BPA has many virtues )
Benefits
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Ris ks vs Ris ks trade-offs (What are the risks of alternatives to BPA?)
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and - on the long run - s tiffle
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