Table Of ContentRISK, SOCIETY, AND POLICY SERIES
Edited by Ragnar E Löfstedt
Risk, Uncertainty, and
Rational Action
Carlo C. Jaeger, Ortwin Renn,
Eugene A. Rosa and Thomas Webler
publishing for a sustainable future
London • Washington, DC
First published in 2001 by Earthscan
Moved to digital printing 2010
Copyright © Carlo C Jaeger, Ortwin Renn, Eugene A Rosa and Thomas Webler,
2001
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, except as expressly
permitted by law, without the prior, written permission of the publisher.
Earthscan Ltd, Dunstan House, 14a St Cross Street, London EC1N 8XA, UK
Earthscan LLC,1616 P Street, NW, Washington, DC 20036, USA
Earthscan publishes in association with the International Institute for Environment
and Development
For more information on Earthscan publications, see www.earthscan.co.uk or
write to [email protected]
ISBN: 978-1-85383-770-8
Typeset by JS Typesetting Ltd, Porthcawl, Mid Glamorgan
Cover design by Yvonne Booth
A catalogue record for this book is available from the British Library
At Earthscan we strive to minimize our environmental impacts and carbon
footprint through reducing waste, recycling and offsetting our CO emissions,
2
including those created through publication of this book. For more details of
our environmental policy, see www.earthscan.co.uk.
Printed and bound in the UK by CPI Antony Rowe.
The paper used is FSC certified.
CONTENTS
Foreword by James F. Short, Jr. 7
Preface 9
1. GENERAL INTRODUCTION 13
1.1 Risk, Ontological Security, and Uncertainty 13
1.1.1 Risk and the Human Condition 14
1.1.2 Imprimatur for the Age 14
1.1.3 Ontological Security 15
1.2 What is Risk? 16
1.2.1 Defining Risk 17
1.2.2 Analytical Perspectives 19
1.3 The Rational Actor Paradigm (RAP) 20
1.3.1 Rationality as Worldview, General Theory, and Special Theory 22
1.3.2 Durability and Malleability: An Example 25
1.3.3 Rationality in Economics 25
1.3.4 The Larger Sociological Critique of RAP 26
1.3.5 The Macro-Micro Link – and Markets 28
1.4 Plan of the Book 29
I. THE RATIONAL ACTOR WORLD
2. RAP: THE MONARCH AND HIS SHAKY KINGDOM 35
2.1 Philosophical Underpinnings of RAP 36
2.2 Economics: RAP as a General Theory 41
2.2.1 Trusting the Invisible Hand 41
2.2.2 Adventures of Utility 45
2.3 Inside the Atom: RAP and Psychology 52
2.4 Sociology and RAP: The Fundamental Tension 58
2.4.1 The Macro-Micro Link and the Problem of Consciousness 58
2.4.2 RAP Knocks on Sociology’s Door 64
3. RISKY DECISIONS OF A SINGLE AGENT 67
3.1 The Monarch and Risk: A Love-Hate Relationship 67
3.2 Insurance and Portfolio Investment 68
3.2.1 Investment Decisions and Expected Values 69
3.2.2 Insurance 70
3.2.3 Portfolio Investment 72
4 · CONTENTS
3.3 Decision Analysis 73
3.3.1 Decision Theory and RAP 76
3.3.2 Critiques of Decision Analysis 80
3.4 Quantitative Risk Assessments 85
3.4.1 The Actuarial Approach to Risk 87
3.4.2 Probabilistic Risk Assessment 89
3.4.3 Toxicological and Epidemiological Approaches to Risk 91
3.5 Natural Hazards 95
3.6 Cognitive Psychology 101
3.7 Problems of Policy Making 108
3.7.1 Comparing Risks 109
3.7.2 Establishing Standards of Acceptable Risk 112
4. RISKY DECISIONS OF INTERACTING AGENTS 121
4.1 Risk in the Theory of Games 121
4.1.1 Probabilities in Games 121
4.1.2 The Labor Market as a Game 124
4.1.3 Conceptual Issues 125
4.2 Risk Communication 127
4.2.1 Senders, Transmitters, and Receivers 129
4.2.2 Risk Debates 133
4.3 Risk and Social Movements 136
4.3.1 Resource Mobilization 136
4.3.2 RAP and Resource Mobilization Theory 140
4.4 Organizations and RAP 144
4.4.1 The Rationality of Aggregated Actors 144
4.4.2 The Rap on the RAP Actor 149
II. LOOKING FOR OTHER WORLDS
5. CHALLENGES AND ALTERNATIVES TO RAP
IN THE STUDY OF RISK 159
5.1 Cooperative Discourse about a Risk Problem 159
5.2 Risk and Organizations 165
5.3 The Concept of Social Amplification of Risk 169
5.3.1 The Process of Amplification 171
5.3.2 Signal Amplifiers in Social Communication 174
5.4 The Arena Metaphor 175
5.4.1 Actors in Policy Arenas 176
5.4.2 Resources in Policy Arenas 178
CONTENTS · 5
5.5 Cultural Theory of Risk 183
5.5.1 Acceptable Risk and the Origins of Cultural Analysis 185
5.5.2 Grid/Group Analysis 188
5.5.3 Cultural Biases Clashing: Interference of Risk Cultures 191
5.6 The Social Systems View of Risks 193
5.6.1 Risks and Double Contingency 193
5.6.2 Social Facts as Irreducible Reality 197
5.6.3 Uncertainty and Social Indeterminacy 204
5.6.4 The Challenge of Complexity 206
6. MODERNITY AND BEYOND 209
6.1 Risk and Modernization 209
6.2 Risk and Scientific Rationality 213
6.2.1 Social Functions of Scientific Reasoning 213
6.2.2 The Use of Science in Policy Making 217
6.3 Post-Modernism 221
6.4 Fundamentalist Revivals 228
6.5 The Relevance of Critical Theory 231
6.5.1 The Dialectics of Rationalization 232
6.5.2 Communicative Action 236
7. FROM MONOLOGICAL TO DIALOGICAL RATIONALITY 243
7.1 The Nature of the Challenge 243
7.1.1 Some Problems with the Idea of Rational Action 243
7.1.2 RAP and Human Choice 247
7.1.3 Labyrinths of Perfection 251
7.1.4 RAP Claims in the Light of Competing Social Theories 255
7.2 Elements of a New Paradigm 258
7.2.1 Scope Conditions 259
7.2.2 Ambivalent Preferences and Expectations 261
7.2.3 Rule Evolution 267
7.2.4 Prices, Investment, and Risk 272
7.2.5 Reflexivity 277
7.3 The Practical Context 281
7.3.1 Implications for Political Behavior 282
7.3.2 Implications for Economic Behavior 285
7.3.3 Social Theory in Historical Context 288
References 297
Index 313
FOREWORD
Thinking About Uncertainty and Risk
It has been suggested that risk is the quintessential characteristic of the
modern world, socially, ecologically, and institutionally. It is so because of
the ways in which we conceptualize and think about risk, quite as much
as the nature of the risks with which we are confronted.
The ways in which we conceptualize and think about risk are, of course,
related to the changing nature of risks, most notably because scientific
discoveries have informed the nature of risks and made us aware of
uncertainties yet to be understood, and because so many uncertainties
and risks result from human activities.
This book is about how we think about risks and uncertainties, and
how we might better do so in the interest of the common good. Jaeger,
Renn, Rosa, and Webler take us on a journey that is both fascinating and
frightening – fascinating as it traces the philosophical and scientific roots
of the dominant paradigm of modern social thought, rationality; frightening
because of the paradigm’s limitations and vulnerability in an increasingly
risky and uncertain world.
Relating risk to ontological security (confidence “in the continuity of …
self-identity and in the constancy of the surrounding social and material
environments of action”; Giddens 1991, p. 92), brings into sharp relief the
problem of achieving a balance among rationalities and between trust
and acceptable risk. Paradoxically both types of balance appear today to
be more fragile than ever before in human history; paradoxically, because
despite advances in knowledge of and control over the demons of the
past (pestilence, famine, disease, etc.), we have yet to come to terms
with the limits or the sustainability of human ecology (Freese 1997) –
surely the ultimate uncertainty and the ultimate risk.
By carefully identifying and explaining the rational actor paradigm
(RAP), its strengths and its weaknesses, variations and alternative
strategies, the stage is set for a radical shift of risk analysis thinking and
practice. The National Research Council Committee on Risk Characteriza-
tion (Stern and Fineberg 1996) calls for redefining traditional risk assess-
ment, combining scientific approaches to hazard identification and
characterization with deliberative strategies involving interested and
affected parties; i.e., stakeholders. The risk decision process does not
stop with risk characterization. It must include risk management, in a
continuous deliberative and iterative process.
Jaeger et al. move beyond the NRC Committee’s assessment and
recommendations, to consider how the interests of stakeholders, their
values and concerns, might best be taken into consideration; how, in
particular, the risk decision process might involve the organizations and
institutions that so dominate the macrosocial environments in which we
8 · FOREWORD
live. Several metaphors inform this process: the “social fabric,” intended to
convey the complex bonds and relationships (micro and macro) that hold
society together, or that, in weakened states, characterize its disintegration;
the “social amplification of risk,” a comprehensive approach to risk analysis
that seeks to explain how risks become recognized, amplified and/or
attenuated; and “social arenas” of behavior, a metaphor used to describe
– and to advocate – a policy decision making process among competitors
operating under conditions of structured rules of interaction. These
metaphors build on recent theory and research from all the social and
behavioral sciences, at once an indication of the richness of advances in
these sciences and of theoretical weakness.
Moving beyond RAP, the authors suggest, is facilitated by recognition
of the ambivalence of preferences and expectations (Smelser 1998),
processes related to the evolution of rules (Jaeger 1994a), recent
developments in network theory (White 1992), and the reflexivity of much
recent theorizing concerning organizations and human collective behavior
generally (Beck et al 1994).
There is hope in developments such as these that some theoretical
synthesis may yet successfully overcome the rigidity of RAP and its lack
of congruence with the real world, while retaining its advantages – and in
the analyses and the discourse experiences reported in this book. Hope
arises, as well, from Kempton et al’s (1995) discovery of common values
regarding environmental degradation, among quite varied groups; and
Heimer’s brilliant demonstration of mechanisms that are able to “bring
self-interest and responsibility into alignment” (1998, p 84), in settings as
varied as insurance companies’ practices regarding “moral hazard” and
among families with children who require the services of neonatal intens-
ive care units.
The risk decision making processes advocated by Jaeger, Renn, Rosa,
and Webler aspire to recognition of their common interests among those
who search for solutions to problems of uncertainty and risk. The
increasingly global character of many uncertainties and risks unites us all
– whether or not we actively engage in the search for solutions – in
communities of fate; challenge enough, surely, for all to ponder.
James F. Short, Jr.
PREFACE1
This book goes to press as the world has entered both a new century and
a new millennium – a transition which has ignited the public imagination
by making us look both at our past and our future. The timing of a book on
risk could hardly be more propitious.
The 20th century began with an enchantment with the new technology
of assembly line mass production and with an unprecedented techno-
optimism. That optimism launched such monumental technological
changes as the harnessing of the atom and of the genetic code. But, we
are now beginning to understand the magnitude of the intended and
unintended consequences of these and other massive technologies of
the last century. So, that century has ended with, if not disenchantment
with technology, at least a deep ambivalence about it. It has ended with
the uneasy recognition that we live in a world replete with risks of our
making.
While the idea of risk management can be traced to ancient times, to
the 18th century BC code of Hammurabi for example (Dietz, Frey, and
Rosa 1999), and while risk has been an essential underpinning to invest-
ment and insurance practices for centuries, the systematic application of
risk to evaluate the technologies and products of high modernism is a
child of the late 20th century. Risk, as we now know it, is a wholly new
phenomenon. It evolved in response to the recognition that our technolo-
gies were not only getting larger and larger, but also more complex and,
in some respects, more dangerous. It evolved, too, out of a paradox created
by modern science. Contemporary technologies and products owe much
of their existence to both basic and applied science. Yet, in service to
public health and welfare, science has developed increased sophistication
and precision – remarkably increased in many cases – in detecting the
unwanted side effects, the risks, of the technologies it helped create.
Risk developed over the past several decades as the key analytical
lens for attempting to anticipate the consequences of our purposive actions
on the environment and ourselves. But, risk is much more than just an
analytic orientation and it is much more than a suite of evaluation methodo-
logies. Risk is also the mark of a new consciousness, a way of looking at
a world of technological and environmental uncertainty. It is a conscious-
ness born of such vast uncertainties as nuclear peace, the durability of
the ozone protecting us, global warming, the extinction of species, and
the possibility of creating species. It is a consciousness entirely foreign to
the optimistic beginning of the 20th century. At the close of that century
risk, not technological optimism, has become a dominant cultural theme.
1 The book is the result of genuine teamwork. Therefore, its authors are listed alphabetically.
For the preface, we considered a more personal style to be appropriate. Rosa wrote it, the
others supported him with comments and amendments.
