The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank’s upcoming World Development Report 2014.
On February 15, 2013, an asteroid 45 meters across sailed past the Earth at 4.9 miles a second. This was the closest encounter on record with an asteroid this big. Such rare events trigger fear because people overestimate the risk of unusual events – at least for a while. The odds of other rare events are often underestimated. People have a hard time understanding frequencies that are longer than a human lifetime; politicians discount probabilities of disasters that are unlikely to hit while they are in office and so they underinvest in prevention. In sum, we have trouble assessing low-probability, high-impact risks – the kind of events dubbed as Black Swan by Nassim Taleb.
Responding to concerns about the asteroid, The Economist (Danger of death! Feb. 14, 2013) created a graphic to illustrate how we are unlikely to die from asteroid impact (odds of one in 75,000,000). The chart showed that more prosaic, but still rare, dangers were worse. For instance, 27 people died in 2008 in America from contact with dogs (a one in 11,000,000 chance of death). The ranking also showed the odds of death in any given year from a range of causes, such as heart disease, choking, falling down stairs, cycling, and bee stings.