Fast and Slow Thinking in the Face of Catastrophic Risk

Abstract

Studies of behavior in the face of natural disasters and mass atrocities provide common lessons about managing catastrophic threats. We cannot assume that the massive destructiveness of an event will lead us to appreciate and appropriately respond to the risk. The potential consequences, whether in billions of dollars or millions of endangered lives, often fail to convey the emotional meaning necessary to motivate effective protective actions. Rather than trusting our desensitized feelings as our moral compass, we must employ slow and careful thinking, coupled with short-term incentives, to create policies, procedures, laws, and institutions that will nudge or even require us to behave in ways that accord with our considered values for protecting human lives and property.

Keywords: insurance, catastrophic risk, natural disasters, genocide

JEL Classification: D01, D03,D81,G22,Q54.