Risk tolerance

I’m on the first business trip since the Covid-19 thing began, back in Atlanta for a series of meetings, and I’ve been struck by the contrasts.  The airports are quiet in a way I’ve never seen in my life, and I’ve been more or less constantly in the air since I was eighteen years old.  There is less ambient noise but you can hear individual conversations much more readily because when people do talk with one another, they have to raise their voice to be heard through their masks.  And everyone is in a mask once you enter the air travel zone: it’s not like out on the street in some places – Atlanta prime among them – where only a minority are wearing them in public.

This is its own contrast to Maine, where people have more or less settled into a quiet routine of always wearing a mask, even the couple in Trump/Pence 2020 campaign t-shirts whom I waited behind to pick up a takeaway pizza (waiting a good eight feet back, no need to push it) on Wednesday night.  There are stories from the American West of people being harassed for wearing a mask – it’s both a symbol of “oppression” and potentially a marker that “you’re one of the infected” – but in Maine it’s mostly the opposite, you get glares and furrowed eyebrows from above the mask line if you’re flouting the rules.  Here in Georgia, it’s a mix; I had a business dinner last night and the staff were actually quite elegant in their black masks, an actually pleasant addition to their crisp white shirts and black vests in the best of the brasserie tradition, but the patrons were a mixed bag, some wearing masks until the sat down, others defiantly leaving their cars without them, talking to others, shaking hands, masculine businessmen hugs all around.

I’ve been thinking about this variance in American society – seemingly not that common elsewhere but since I can’t travel elsewhere I really don’t know – and I think I understand it more and more.  What this comes down to is risk tolerance and its intersection with our trust in society, and it actually speaks more broadly, to themes such as how we view climate change or the role of government or even how we define monetary value.  Before I go down those pathways, though, I’d like to introduce a quick thought exercise about how we perceive risk.  Think in your own mind about how you make tradeoffs between personal risk and reward.  Usually this is in a career or financial context: do I spend five dollars on scratch tickets, hoping for maybe a winner or two and ten dollars or even the chance at a jackpot, or do I allocate the five dollars to non-risky pursuits?  If I have a bit of savings, do I invest in the market, or real estate, or a government-guaranteed bank savings account?  Do I choose an enterpreneurial career, or do I gravitate towards a job with stable prospects and a good pension plan?  Do I enlist in the armed forces because it’s a good career, or because I’m willing to risk my life for a nation or the values represented by that nation?

How we array ourselves around these questions is not right or wrong; each of us approaches the tradeoff between stability and gain in a different way.  Note the examples I chose: I’m not saying we are doing this selfishly.  Sometimes we will choose a risky option that has very little personal upside.  But our risk tolerance function is a basic way of thinking about how comfortable we are trading off the potential for benefit with the possibility of loss.  And there is a wide spectrum here: I have no intention of skydiving, but former President George H.W. Bush made a point of skydiving on his birthday into his 90s.  I left the world of stable paychecks a long time ago, indeed happily assuming the mantle of internal muckraker at a number of large companies even though I was eventually unceremoniously pushed out of a couple of them for doing so.  I did so with some savings behind me, sure, but I know plenty of fellow executives with even more in their personal accounts who simply chose to keep their heads down and continue to cash in.  I’ve never minded moving to a new place – indeed, I love putting my expectations and my ingrained assumptions at risk by exposing them to new settings which force me to adapt to different ways of living – but plenty of people (my ex-wife, say, or my parents) look at me as a kind of nutter, and happily nest themselves in deeply wherever they are.

This is all fairly obvious – but the point is that each of these risk tolerances can usually be explored by us individually without really impacting others.  We will, however, generally find ourselves attracted to others with at least somewhat similar risk tolerances; if I want to be constantly on the move, I’m probably not going to mesh well with someone who simply wants to nest and never leave home (hence, among other reasons, I have an ex-wife).  I’ll find common ground with others who share my acceptance of the possibility of loss, even personal loss, as the cost of discovering something extraordinary, and while I may cherish them and love them, I’ll probably not be able to really connect with others who wish to deeply love the simple and the known because the potential cost of losing those is, to them, too great.

Not all times are normal, however.  I just finished reading Fear, by Gabriel Chevallier, a roman à clef based broadly on the author’s experience as an infantryman in the French army from 1915 to 1918.  World War I was, obviously, not a normal time; societies in such moments effectively throw out the idea that we can explore our individual risk tolerances and demand that everyone assume a common risk tolerance – or maybe differently, societies demand that we all share a common upper or lower boundary for risk so as to navigate a commonly experienced crisis.  Chevallier’s novel explores the terror of being on the front lines, but what comes through most hauntingly is the fact that the soldier in the trench is not allowed to have an individualized experience of the risks being borne by society: the soldier has to bear the risk that society demands be taken without having any individual right to resist or say that they don’t share the same risk tolerance function.  In times where society’s fabric is in some way at risk, the individual risk functions collapse, if you will, into a single expression of what society demands.

What also struck me about Chevallier’s novel is that war is a kind of reductio ad absurdam of this concept.  First, it is purely a human experience – we’re not dealing with viruses or environmental change here – and it is a direct, linear set of issues.  There is a breakdown of some kind in two disparate groups of people to settle a difference, or to divide a limited set of resources.  Instead of one group acting magnanimously, or each group agreeing to a partial sacrifice, one group or both groups decide to kill members of the other group until such time as the conflict ends, due either to one group crying “uncle” or else the losing group being killed well and truly.  It is, in other words, a set of purely human choices that lead to war – and thus the collapse of individual expressions of risk have to be faced by a deep look in the mirror, both individually and collectively.  Second, though, because it is a life-and-death risk – the ultimate binary choice – that is being taken when facing off with an opponent with tools solely designed to kill, one doesn’t have to get into nuances about tradeoffs and choice.  The tradeoff is kill or be killed, nothing more or less; the upside is its mirror, live and have the chance of making your own future decisions, or be dead.  As such, it’s a helpful boundary condition, but as we introduce nuance, we’ll have to think about what other factors come into play.

Even in that boundary condition, though, Chevallier’s protagonist has an ambivalent attitude towards the society that has chosen to go to war and put his life at risk.  He realizes that he makes a decision to put himself at risk, for a combination of personal and group-identity reasons, at a regular basis, and also realizes that he takes himself out of risky situations by shirking duties or finding ways to get non-front line assignments that others don’t have access to.  He has no particular bond to France or the “ideals” (such as they are) of the Third Republic, and finds the casual willingness of his father and other civilians back in the cities to demand that the young men at the front risk their lives to be disgusting.  But as an early 20th century man, still trying to sort out his own concept of identity and still trying to not be trapped by the lingering conformance of pre-modern man, he is unable to resist.

That’s the other side of the response function for risk tolerance in a crisis: what is the general level of identification or trust in society as a whole?  If it’s high, then even though individuals may feel an extreme aversion to the risks being taken – or that they are forced to take – on behalf of society, collectively those individuals will come together and push or pull in the same direction.  If that identification is low, they won’t.  Take, for example, the response of French society to the Nazi invasion in 1940.  France had been wracked by decades of self-doubt, stemming indeed from the experience of World War I and the moral bankruptcy of the forces that led the Third Republic.  In such circumstances, the individuals who make up society couldn’t find a common cause against which to collapse their individual risk tolerances into a singular will to sacrifice on behalf of the group.  And the Nazis steamrolled over them and the country had to wait (well most of it, with the exception of the small Resistance minority who individually had a much higher risk tolerance than society) for the Allies to bail them out.

Again, this is in war; the choices are stark.  Do I risk my life, or do I desperately try to preserve it, in exchange for killing someone else, or avoiding being killed by them – that is the fundamental question, both for individuals and societies, when faced by the human will to fight and kill for an allocation of worldly spoils.

But we’re not facing that right now.

The Covid-19 pandemic couldn’t have been engineered better to illustrate the immaturity of man and its inability to recognize risk, both at an individual and at a societal level.  The risk is far from life-or-death; for most individuals, there is a very low likelihood of death (not zero, but the media has a tendency to forget that there are no zero likelihood of death events out there, not as long as we have a 100% likelihood to die at some point in our lives).  For children and most people under the age of 40, even being infected is highly unlikely to result in hospitalization, dramatic instances aside.  However, if you’re older, or have pre-existing conditions of a variety of sorts, or have a lifestyle not given to health in the first place, the odds start to increase, and with enough of a confluence of factors, contracting the disease look more and more risky in the sense of the potential outcomes get worse and worse.  But it isn’t certain in its prospects in the way that humanity and war is certain; it’s a nuanced, very complicated outcome function, and that spectrum of risk isn’t related in any real way to your individual risk tolerance function.

Similarly, our identification with “society” has grown more fragmented.  First, there are more “societies” to choose from – gender and sexuality being the vector which has emerged more clearly in the last few decades, but that has been accompanied by the splintering and fragmentation of religious communities into smaller but more intense groups within the religiously active matched against a growing group of religiously indifferent.  But even looking across these “societies” of choice, which I’ve talked about elsewhere, there are very few overarching identifiers for a modern non-authoritarian state of any size so as to form points around which to coalesce.  The collective reaction of, for example, the United States to the 2001 terror attacks, shows that what is perceived as a life-or-death, wartime threat still has enough force to enable a collective risk response. But the very appropriate rise of skeptical and nuanced readings of history result in an erosion of shared narratives of the birth and development of societies.  It was never appropriate to put George Washington on a pedestal, but we did and for a large potion of the American people that was a comforting totem into which we could invest a collective narrative.  But it was always flawed; with painfully few exceptions, all histories of human advancement contain a deep and fast-flowing undercurrent of injustice not far below the surface.

So it strikes me as natural that when a society which prizes individual experience, and which has moved towards a marketplace of narratives instead of a single dominant one, faces a risk crisis which does not involve an existential threat but only involves a nuanced and statistically complex individual threat, there would be the kind of response we’ve seen in the United States to date.

To have a coherent response which did not give rise to a backlash, one of a number of things would have to be present.  On the one hand, we as a nation would have to share a reasonably consistent individual risk tolerance function vis-à-vis the Covid-19 virus’s mortality function and profile – but we don’t.  We are a melting pot of cultures, each of which respects, say, the elderly and the young in very different ways, each of which approaches the risk of personal injury versus personal benefit very differently.  We don’t have a consistent cultural norm to fall back on (indeed we really never have), so we are forced to parse through probably the most varied set of risk preference functions of any other major country on earth (with the possible exception of India).  This means we can’t fall back on a common view that, say, the elderly – who seem most at risk of death or severe outcomes from Covid-19 – are so valued that we will collectively reduce risk to preserve them; indeed much of society worships youth to the point that they get painfully close to consigning the elderly to their fate without any qualm.  So the United States is not in a position of, say, Italy or Germany of having a more or less consistent national pattern of individual risk tolerance functions.

Another way to generate a coherent response would be to have a disease with a more consistent risk profile.  I keep bringing up cholera because for some reason I’ve read a few nineteenth century novels and histories where it looms large, but it’s a good counterexample.  Cholera is deadly, but its more or less equally deadly to everyone, old and young, black and white, rich and poor, thin and fat.  It’s thus much closer to war as being a shared life-and-death matter, making a more powerful agent against which to collapse individual risk tolerance into a shared collective risk response.  Or alternatively, it could just not be that bad – instead of killing 2-5% of those with an active infection, it could kill 0.1% much like the normal bog standard winter flu – and thus it would be easier to just collectively accept the risk.  Or it could be at that 2% mortality level but impact everyone at that level – babies and teenagers as much as Mom, Dad and Grandpa – so that we’d have a common baseline against which to assess a collective response, and the young couldn’t think “well, it doesn’t affect me” or alternatively, “just keep the old people in quarantine until this blows over.”  But the coronavirus doesn’t have a simple mortality profile; Grandpa – especially if he’s overweight and smokes – is probably a goner, whereas irresponsible nineteen-year-old Timmy, going to a kegger at Liberty University, is with a very, very high degree of certainty not going to have anything happen to him – or at least, it’s more likely he’ll die of alcohol poisoning than require hospitalization for the virus.

If you look at the media – traditional and social – there is a hard core of people who reject this and say that any potentially preventable loss of life is unacceptable.  This is nonsense; that is simply an attempt to assert the existence of a universal risk function which, as we know simply by the act of talking to one another about how fast we drive or whether or not bungy jumping looks like a good idea, is false.  Asserting a universal risk tolerance function on a non-existential threat is destined to fail – but in this case, where the risk outcomes are not consistent across different populations, populations which already have fragmented away from one another for a wide variety of reasons, such an assertion can only come across as arrogant and off-putting.  Indeed, the likely outcome is to actually trigger a rebellion response, not engender collective action.

But I think there’s a reason for this.  Many people look to public health officials for guidance on complex issues on nuanced medical matters, with good reason.  But let’s think behaviorally for a second: does public health attract people who, say, view the pleasures of a good cigar worth the personal risk of lung cancer and the social inconvenience of secondhand smoke?  Does the profession attract daredevil race car hobbyists or people who make leveraged plays on small cap stocks?  No, it does not – it attracts people with generally low risk tolerance, who enter the profession because of their attraction to a realm which can further reduce both personal and societal risk levels.  Thus in a public health crisis, instead of feeding our public health professionals with a non-existent culturally normalised risk preference function which can then inform their own assessments of the costs or rewards of certain programs versus the risk of further spread and mortality, we simply look to them and say “what do you think.”  Well of course, by professional and cultural and individual preference, they will prefer solutions which reduce risk regardless of (or at least with relatively less importance attached to) economic or personal cost.

There’s a simple analogy that can make this clear.  Say you suddenly inherited $1 million and then went to an investment professional and said “How would you invest this?” or alternatively, “What should I do with this windfall?”  The questions are important because they are so basic: a good investment professional should respond with “I can tell you what I would do for me, and I can tell you what I think you should do from my perspective, but what I really need is more information about your objectives and your tolerance for risk.”  What we as society and the media have done is ask the public health professionals “What should we do” and often “How are you personally dealing with the coronavirus?”  In an instantaneous response media environment, Doctors Fauci and Brix can’t say “hold on, first we need a more coherent explanation of the cost/benefit preferences of American society as a whole, or alternatively, a set of risk preference functions for relatively coherent geographical regions.”  No, CNN and Fox News and the New York Times wants “what should we do”, and of course they give us an answer which reflects their own personal risk function and their own professional preferences.

When our response is then “wait, that costs too much” or “wait, that seems overly draconian,” it’s really our fault in the first place for not giving them a more coherent notion of what our risk function is.  Is the sacrifice of liberty to travel, to communicate, to conduct business greater than our intolerance for an increase in death?  Then we shouldn’t sacrifice it – much as we do, say, in allowing people to die pretty consistently in automobile accidents in a sacrifice to our need to travel in high-speed individually piloted three-thousand-pound metal boxes instead of building denser cities with pedestrian access.  That’s probably my favorite example: building denser cities would be cheaper and more sustainable than building sprawl, so not only would car deaths go down but the economy would be more efficient.  But our collective relative valuation of personal freedom exceeds any economic or mortality savings of alternatives.

So there’s no great mystery as to why the United States has what feels like such a jumbled and ineffective response.  It’s ineffective if you think this is an existential threat, but it doesn’t seem to be – at least not consistently so.  It’s also ineffective if you believe the United States should have a single coherent response, but if you think that, you’re not paying attention to what the United States is, which is a nation which has gradually and willingly given up a monolithic notion of what it is in order to give individuals the freedom to choose their own risk function, along with other elements of their identity.  That divergence in risk tolerance gives us crazy inventors and entrepreneurs, and also gives us bigoted racists who want to return to antebellum plantation days.  It gives us Silicon Valley and it gives us little pink houses.  It’s maddening and infuriating to nearly everyone at some point, but it’s a society which has chosen to be this way – that has chosen to relax society’s grip on individual risk.  I’ll note that I’m pretty sure we’d still defeat the Nazis or whoever is the next evil existential threat, and I’m pretty sure we’d also spend money on the next equivalent of the world’s greatest plumbing and sewage system too if the next virus was as bad as cholera.

But this pandemic isn’t that, and American society is, therefore, going to continue with its experiment of balancing risk and freedom, collective threats with individual outcomes, personal choice and the strength of society’s fabric.  This particular experiment is revealing volumes about our collective risk tolerance, how it splits along age and geography and wealth and racial lines.  The moment in time couldn’t be more interesting as well: protesters clearly don’t care about the risk of the virus in the face of driving the expansion of the American promise to our Black people, and many White people clearly don’t care about the risk of the virus in the face of protesting their inability to fly the Confederate battle flag at stock car races.  Our collective risk function is more diffuse, more unidentifiable than ever – but our individual risk preferences have never been forced to be more explicitly articulated.  It’s fasctinating.

What I’m really interested in is what we do about climate change.  Wow, that could be awkward.