Humans Are Fairly Competent Risk Assessors: And This Was One Of The Worst Policy Decisions I’ve Ever Seen

I see last week that Boris has deigned to allow socially distant wedding receptions to go ahead again after spending the previous 2 weeks spoiling people’s Big Day, and throwing the wedding, restaurant, flower and beauty industries into needless uncertainty. I have to say that, in terms of short-sighted stupidity, the initial decision to prevent wedding receptions with no notice was one of the worst small domestic policy decisions I’ve ever seen a government make. It was disgraceful that the government senselessly spoiled everyone's wedding plans for 14 days with Boris's ridiculous metaphor about squeezing the brake pedal.

Of course it's possibly sensible to show some caution to avoid another spike, and it's probably reasonable to squeeze that brake pedal when it comes to casinos, bowling alleys and skating rinks. But weddings are different for a number of reasons, and without writing a long missive expounding on what most of you surely also concluded, let's just say that this decision was a needless, callous, unsympathetic assault on thousands of people's special occasions - not to mention the detrimental effects on small businesses, on people's mental well-being, and on the ushering in of pointless uncertainty for future wedding dates. Weddings of up to 30 people, where properly conducted social distance measures are adhere to, are relatively low risk occasions - whereas the government-mandated short notice decimation of thousands of people's precious celebrations was guaranteed to cause much more unreasonable pain and disappointment than any politicians should have the power to cause.

I'm afraid that decision, like so many others is indicative of two principal things: that politicians have too much control over our lives, and that they are poor judges of the individual risk calculus under which humans operate. They are allowed to get away with it because for years the meagre bandwidth of political discourse on which this country has been fed has made us believe we are incapable of taking responsibility for our own lives.

Reality check

The world is risky, and society is complex as people try to negotiate numerous trade-offs every day of their lives. Should I park on a single yellow line for 10 minutes while I pop into the bank? Shall I go cycling tonight or write an essay? Should I order the Belgian chocolate cheesecake or go without for the sake of my waistline? Should I break the speed limit if I’m late for a friend's barbecue? People make these trade-offs every day; they trade-off the slight risk of a heart attack for a slice of cheesecake, and the slightly increased risk of a speeding fine to get to their friend’s barbecue. Moreover, as cars become better, people take more risks. The introduction of seatbelts meant drivers were prepared to drive less safely with seatbelts on for a faster ride*. The introduction of a more diverse range of tasty food meant people were prepared to increase their chances of atherosclerosis to enjoy a richer cuisine. The list is near-endless.

Many of those calculations take place within the subconscious, and don’t become a very active part of our active conscious negotiations. We are ultra-fast risk assessors, and generally pretty good at doing a better job than anyone else at optimising our own utility. Covid-19 has, of course, altered the landscape of our ordinary day to day risk calculus, where we now have to factor in questions like whether we should wear a mask, go on holiday, visit our relatives, and shop in the supermarket. And politicians now have to make more difficult policy decisions regarding whether to impose a lockdown, whether schools can open, and how to prioritise PPE provisions.

 

The problem politicians have (and ditto biologists, epidemiologist, and chemists) is that society is too complex and too locally bottom-up oriented for any authority figures to know the ratio of Covid to freedom and value that we’d prefer, or the optimal trade-off between more safety and fewer economic transactions. Imagine a lockdown policy that’s expected to save 20,000 British lives (let's say random lives for simplicity). How do we determine if that policy is worth adopting? As a percentage of the UK population, 20,000 lives is about 0.03% of the population. That means that, all things being equal, the policy has a 0.03% probability of saving your life (that's a 1 in 3350 chance of you dying). What are you personally willing to pay for a policy that has a 0.03% of saving your life? Let's say everyone in the UK would be willing to pay £1500 to avoid a 1 in 3350 chance of death, then a policy that cost each citizen £1500 would cost the UK over £100 billion. Consequently, such a policy would only be beneficial for the UK if it reduced the national income by less than £100 billion.

The trouble is, it's nigh-on impossible to know how much we'd pay to avoid a 1 in n chance of death, especially as everyone in the UK does not have an equal chance of dying. And this equation is made more difficult still, of course, by the fact that every individual has their own personal calculi regarding how they negotiate life's trade-offs. Some people are more risk-averse than others. Some are in a higher fatality risk category than others. Some people need more social interaction than others. Some are eager to get married in the next month, whereas others are more willing to wait until next year. Only we as individuals have the composite knowledge to evaluate our personal package of costs and benefits, and negotiate our own risk calculus to make decisions consistent with what we value.

A politician might protest that we are alright looking after ourselves, but others need protecting to ensure we don’t impose unwanted costs on them. But while that’s occasionally true, it’s mostly false. If everyone is allowed to make their own policy decisions, then the revealed preferences should start to play out in a fashion that best serves society as a whole. Some businesses will operate with more risk tolerance, some with more risk aversion; some prices will rise, some will fall; some people will change their behaviour a lot, some only a little; some will opt for a slightly smaller chance of Covid-19 for more social distance, and some will opt for a slightly greater chance of Covid-19 to save their business, or to stay in close contact with friends, or to pursue the burgeoning romance they had just begun. There isn’t much a government can do to make things more optimal than society’s collective can manage themselves.

Therefore, it's not self-evident that we shouldn't have just accepted that Covid-19 was going to be a problem we have to live alongside for a while, and that only elderly people and younger vulnerable people needed to shield, while the rest of the country carried on in a thriving economy as usual, and simply self-isolated if they showed Covid-19 symptoms (which is what most were doing anyway, whether they had symptoms or not). I'm not sure that's right, but I'm not sure it's wrong either. It’s almost impossible to measure how well everyone has done so far during this Covid-19 crisis, because we don’t know how much the Covid-19 policies have cost, how many present lives have been saved, how many future lives have been lost, how much future damage has been done, and what the near infinite alternative permutations might have yielded.

But just to get a sense of things - economists have fairly consensually measured on the basis of how we’ll behave probabilistically to avoid death that a human life is valued at approximately $10 million dollars. In other words, empirically people are willing to pay about $1 to avoid a one-in-ten-million chance of death. If we suppose the Covid policies have cost us at least half of this year's economic activity, that's the pound sterling equivalent of about $1.4 trillion, which at $10 million per life is about 140,000 lives. Only if the Covid-19 policies have saved at least that many UK lives, and there was no better alternative, can we say that they have been the right policies. And remember, when recording Covid-19 deaths, we must only record here those who wouldn't have died anyway during the same period, which makes the total number of Covid-19 deaths significantly lower than the 41,000 the ONS stats tell us

And that is the upshot of the past few months of Covid-19. Some people wanted the economy shut down and for everyone to keep an ultra-safe distance until Covid-19 diminished; some people wanted to protect the economy and live on through it until Covid-19 diminished and come out the other side stronger; some who initially demanded months of lockdown are now telling us how worried they are about the economy - and no one is probably ever going to know with certainty what the absolute optimum approach was.

 

* If you doubt this, you only need consider the statement when said this way - "If a driver has no seat belt he or she will drive more carefully" - a statement that is very obviously true, and one that no one has any issue with.  Saying "People drive less safely with seatbelts on" is just another way of saying "People drive more safely with seatbelts off". Both are equally true, they are just different words to say the same thing.

Is The Government Stupid Or Does It Just Think We Are?

Aaargh….I've just noticed this latest brainwave from our dear leaders:

Policy headline: From April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users.

Policy objective: The application of the current corporate tax rules to businesses operating in the digital economy has led to a misalignment between the place where profits are taxed and the place where value is created.

There's no question this is a bad policy, because any taxes on corporations are a bad idea. But it's what the government says next that really beggars belief:

Impact on individuals, households and families: This measure has no direct impact on individuals as it only affects businesses.

It's this kind of combination of ignorance and slipperiness that politicians really should be held accountable for - because of course this measure is going to have a direct impact on individuals, as it will be individuals who pick up the bill in the form of the higher prices, when the digital companies merely pass on the cost of this tax to their customers. Tut tut!!

Writer's Update: On Atonement

This is the quietest I've ever been in terms of writing output - but be assured, I haven't lost interest, and I still feel like I have a million things left to say. At the moment I'm preoccupied with exciting outside projects to do with wedding planning and house ventures, so this is definitely the season for putting the pen down.

However, a friend asked me for my thoughts on atonement, so I jotted down brief response, which some readers may find of interest. Reprinted here:

Atonement means reparation for wrongs we have committed. We are all riddled with faults, mistakes and regrets, but most times they get suppressed into the emotional sub-ducts of the unconscious, where they never get dealt with properly. We have all done a lot wrong, so guilt is an appropriate emotion, but not an absolutely compelling one, because we need more, which I’ll try to flesh out. Now of course it’s always good to acknowledge past mistakes, and seek forgiveness when appropriate, but in a profound way, those sentiments, if left as that stage, will actually make us worse in the long run, not better, because we’ll be relying on our own steam, and that is not what we were created for.

In the Old Testament, the Hebrews atoned for their sins by sacrificing the blood of their livestock. But in the New Testament, Christ has made a perfectly sufficient atonement for our sins, on our behalf, with His own blood for all those who will trust in Him (which is why He is called the Lamb of God). That is why self-atonement will never ultimately work – because we can never pay for ourselves what has already been paid for us by God. If we could, Christ wouldn’t have taken up His cross; and if we try to pay for it ourselves, we deny Christ in the process, and that will not help us either, as the book of Hebrews says:

"For the Law, since it has only a shadow of the good things to come and not the very form of things, can never, by the same sacrifices which they offer continually year by year, make perfect those who draw near.”

Yes, on the one hand it’s true that it’s essential for human well-being and contentment that we understand our sins, amend our behaviour to correct them, and seek forgiveness from God and from others. There is just no other way one can be a fulfilled human being without it, despite the ways we deceive ourselves to the contrary. But underpinning this truth is an even more primary one: that we are all equally forgiven sinners, and all equally loved by God, and Christ died on the cross to buy us the free gift of salvation through grace. Therefore, we are to improve ourselves and seek goodness, but under the strength of Christ’s love and guidance, knowing the prize has already been won for us. As Philip Yancey says in his excellent book What's So Amazing About Grace?:

“There is nothing we can do to make God love us more; and there is nothing we can do to make God love us less”.

What a profound statement that is we could spend literally months unpacking it, and still only skim the surface. Under Christ’s headship, we have an interesting but complex phenomenon: we have to seek the truth in a way that recognises our own wrongdoings, but equally we are compelled to love ourselves and be kind and generous to ourselves in order to reflect the love Christ has for us, and the grace He showed us on the cross. At the surface level, this seems like a bipolarity of tension, where we are asked to be harder on ourselves than we are used to (in terms of recognising our sin) but kinder to ourselves than we are used to because of Christ’s love and grace towards us (see 1 John 1:7 – “The blood of Jesus cleanses us from all sin).

That’s also true at a psychological level: holding on to anger, resentment and guilt is worse for our well-being than owning those things through repentance. The better we want to become, the harder we want to try to eradicate even those small faults that wouldn’t have bothered us so much when we weren’t trying so hard. Striving to be excellent human beings makes it easier to atone (because we have more humility) but also easier to frame our atonement within the power of God’s grace. Knowing we will never be good enough by ourselves is, in fact, one of the most liberating self-discoveries we will ever make. It is the doorway to seeing grace for the first time, knowing God in Christ - and it is like discovering a little bit of Heaven on earth.