Nice. The topic of financial risk comes to mind. At an individual level, having an overdraft or HELOC or similar probably increases a person’s financial risk tolerance in a way that still keeps them close to red line, but moves the goal posts. Eg if they have no access to credit, $0 is the baseline, whereas if they have $1,000 credit line, -$1,000 becomes their new zero.
Then at a larger scale, if a whole financial institution were able to rely on a government bailout in the event of risk back-firing, well…
Financial risk is a good example. Right now you see it with Student Debt. Yet forgiving it isn't helping anyone except upper middle class kids who went to private school.
Finance is a good example. Hyman Minsky’s Financial Instability Hypothesis states that as regulators try to make financial markets safer (for instance by bailing out failed institutions), investors naturally take bigger risks.
“All wheel drive vehicles drive faster in the snow because they can but can’t stop faster.”
This reminded me of a conversation with a friend who had an all-wheel-drive SUV several years back. I used to live in Cleveland, and we were in the office during a major snowstorm. While heading home, I told him to drive carefully since the roads were not clean. He said he had an SUV, and I said nothing is 100% safe. I was driving slowly, and after a few miles, I saw an SUV on the other side of the road. It was a state highway with a 50 mph speed limit, and I thought this vehicle looked familiar, so I stopped and saw my friend in the SUV. I asked him what happened, and he said his SUV skid. Lucky for him, no one was driving in the other direction; otherwise, it would have been a head-on collision with a vehicle. So, it taught everyone that nothing is 100% safe.
On the other hand, I sometimes think we are trying to make the world/environment too safe for our kids, and we do not want them to fail or make mistakes, which will probably make them less resilient in handling life’s difficult situations. I am not saying we should not guide them or secure things, but I think we do more than we should, and I include myself in that category.
While driving today, I remembered a real-life incident written by one of my favorite writers, including the loss of two lives, but it teaches you a lot about risk. If you have not read it, I highly recommend it.
As a former college football player, I can completely attest to the sense of security you feel wearing pads but I know first hand how little protection they actually provide. Leading head first into a tackle almost seemed normal at the high school level, but was really hard on your head and neck. In contrast, rugby players have significantly fewer head and neck injuries without pads. They don’t have the false sense of security and are much better at keeping their head out of a tackle.
Great example and yeah, I learned that lesson boxing with gloves and not just wraps. My elbows and wrists were so damn sore the next day because the ‘padding’ of the gloves doesn’t reduce the impact, it just distributes it and it still reciprocates up your arms. I could hardly move them for 3 days.
Ah yes, another great example. I haven’t ever been a boxer so I wouldn’t have thought how much the gloves can actually make your arms more sore. I guess maybe it’s better than a broken hand.
Interestingly enough, you can break a hand faster with gloves because you'll get a repetative fracture vs. a explicit one. Boxer's break of the pinky bones happens more often with gloves than not.
Good to know. I’d thought about taking a few boxing classes but figured my head already had enough punishment. But now I’m more worried about my hands than head!
Thanks for the advice! I'm off to remove all the railings from the staircase in our house.
Jokes aside, I first heard of the Peltzman effect in relation to a bike helmet debate in Denmark. Sure, wearing a helmet technically protects your head to a better extent than nothing in case you end up falling and hitting you head. But it also gives you the illusion of safety so you take more risks while biking. In addition to that, and for similar reasons, car drivers might subconsciously drive closer to cyclists who wear helmets and increase the risk of collision.
My decision not to wear a helmet whilst living and cycling in Germany was influenced by a study which measured various parameters and concluded that motorists allowed most space to un-helmeted female cyclists. As I pootle rather than race, my biggest danger is motorists.
I am all for your polymathic mission, Michael. However, if there is one knowledge domain where a little knowledge can be dangerous, it's this one (risk judgment and decision-making).
The idea of risk habituation is appealing but quite controversial and based on very weak evidence, especially when generalized across behaviors and demographic groups. It is also linked to another disputed yet popular concept known as moral 'moral hazard', which can be quite detrimental (e.g. some mothers and adolescents believe that HPV vaccination will increase the chance of risky sexual behavior, resulting in vaccine hesitancy.)
RJDM is an extremely challenging domain and if you ever want to dive deeper and explore the field a little more together, I'd be happy to do so (I occasionally try to clear the fog on the subject)
Even confidence in your own abilities can lower your perception of risk. If you’re a strong swimmer, you are more likely to take risks in the open water that someone who is a weak swimmer would not take.
If you are a skilled MMA fighter, you might be tempted to fight a mugger with a gun who just wants your wallet. You may be successful, but attacking the person with gun, in most cases, is much riskier than simply complying.
Now, it’s still good to be a strong swimmer and to know how to fight, but the key is to not take blind or unnecessary risk.
In some cases, risk mitigations of small things are worth increasing the risk of larger things, provided that you can maintain the perceptions of those risks. It’s all about tradeoffs.
Understanding stuff like @Michael Woudenberg writes about in his newsletter are absolutely essential to being a leader or just a thinking person.
Totally! I saw this in freediving and my instructor kept reminding everyone that the better they got at freediving the more likely they were to die freediving.
Yeah, I wrote the framework of this in a series of posts during COVID because people were losing their minds and not realizing how much extra risk they were exposing themselves to.
Let me state up front: you should wear your seat belt any time you're in a car! It's just smart.
That said, I bet you can figure out where I'm going with this. People who care about me think I'm crazy if I don't put a seat belt on, and maybe they're right, but in my mind, I'm just going to pay very close attention during this particular drive.
Again, nobody else should do this. I'm just saying: I've done it.
I might have a better example from martial arts if I think about it for a bit.
I also thought about folks who wore those stainless steel gloves whenever chopping onions or whatever. People went fast and got sloppy, and you could still hurt yourself if you sliced into that mesh glove.
Cut gloves aren't a terrible idea but they don't stop stabs! I did slice a finger wide open gutting a fish a couple years back without the gloves. A cut glove in the off-hand isn't terrible
Oh yeah. For me, the simple formula of speed x quality x economics means I can do 2 of those 3 things really well. I tend to ignore speed completely these days if I'm ever cooking for someone else.
I haven't sliced my finger open in 20 years, knock wood.
Nice. The topic of financial risk comes to mind. At an individual level, having an overdraft or HELOC or similar probably increases a person’s financial risk tolerance in a way that still keeps them close to red line, but moves the goal posts. Eg if they have no access to credit, $0 is the baseline, whereas if they have $1,000 credit line, -$1,000 becomes their new zero.
Then at a larger scale, if a whole financial institution were able to rely on a government bailout in the event of risk back-firing, well…
Financial risk is a good example. Right now you see it with Student Debt. Yet forgiving it isn't helping anyone except upper middle class kids who went to private school.
Finance is a good example. Hyman Minsky’s Financial Instability Hypothesis states that as regulators try to make financial markets safer (for instance by bailing out failed institutions), investors naturally take bigger risks.
Right. 2008 showed how that went vs. when we held people accountable in the savings and loan fiasco previously.
“All wheel drive vehicles drive faster in the snow because they can but can’t stop faster.”
This reminded me of a conversation with a friend who had an all-wheel-drive SUV several years back. I used to live in Cleveland, and we were in the office during a major snowstorm. While heading home, I told him to drive carefully since the roads were not clean. He said he had an SUV, and I said nothing is 100% safe. I was driving slowly, and after a few miles, I saw an SUV on the other side of the road. It was a state highway with a 50 mph speed limit, and I thought this vehicle looked familiar, so I stopped and saw my friend in the SUV. I asked him what happened, and he said his SUV skid. Lucky for him, no one was driving in the other direction; otherwise, it would have been a head-on collision with a vehicle. So, it taught everyone that nothing is 100% safe.
On the other hand, I sometimes think we are trying to make the world/environment too safe for our kids, and we do not want them to fail or make mistakes, which will probably make them less resilient in handling life’s difficult situations. I am not saying we should not guide them or secure things, but I think we do more than we should, and I include myself in that category.
Thanks for sharing. Yeah, with my kids it is hard to let them be exposed to risk that can hurt but those little wounds teach really well.
While driving today, I remembered a real-life incident written by one of my favorite writers, including the loss of two lives, but it teaches you a lot about risk. If you have not read it, I highly recommend it.
https://collabfund.com/blog/the-three-sides-of-risk/
Sad but great story. Thanks for sharing!
As a former college football player, I can completely attest to the sense of security you feel wearing pads but I know first hand how little protection they actually provide. Leading head first into a tackle almost seemed normal at the high school level, but was really hard on your head and neck. In contrast, rugby players have significantly fewer head and neck injuries without pads. They don’t have the false sense of security and are much better at keeping their head out of a tackle.
Great example and yeah, I learned that lesson boxing with gloves and not just wraps. My elbows and wrists were so damn sore the next day because the ‘padding’ of the gloves doesn’t reduce the impact, it just distributes it and it still reciprocates up your arms. I could hardly move them for 3 days.
Ah yes, another great example. I haven’t ever been a boxer so I wouldn’t have thought how much the gloves can actually make your arms more sore. I guess maybe it’s better than a broken hand.
Interestingly enough, you can break a hand faster with gloves because you'll get a repetative fracture vs. a explicit one. Boxer's break of the pinky bones happens more often with gloves than not.
Good to know. I’d thought about taking a few boxing classes but figured my head already had enough punishment. But now I’m more worried about my hands than head!
Thanks for the advice! I'm off to remove all the railings from the staircase in our house.
Jokes aside, I first heard of the Peltzman effect in relation to a bike helmet debate in Denmark. Sure, wearing a helmet technically protects your head to a better extent than nothing in case you end up falling and hitting you head. But it also gives you the illusion of safety so you take more risks while biking. In addition to that, and for similar reasons, car drivers might subconsciously drive closer to cyclists who wear helmets and increase the risk of collision.
Humans are weird.
I hadn't heard that about helmets but it makes sense.
My decision not to wear a helmet whilst living and cycling in Germany was influenced by a study which measured various parameters and concluded that motorists allowed most space to un-helmeted female cyclists. As I pootle rather than race, my biggest danger is motorists.
Fascinating!!
I am all for your polymathic mission, Michael. However, if there is one knowledge domain where a little knowledge can be dangerous, it's this one (risk judgment and decision-making).
The idea of risk habituation is appealing but quite controversial and based on very weak evidence, especially when generalized across behaviors and demographic groups. It is also linked to another disputed yet popular concept known as moral 'moral hazard', which can be quite detrimental (e.g. some mothers and adolescents believe that HPV vaccination will increase the chance of risky sexual behavior, resulting in vaccine hesitancy.)
RJDM is an extremely challenging domain and if you ever want to dive deeper and explore the field a little more together, I'd be happy to do so (I occasionally try to clear the fog on the subject)
But keep up the good work.
Cheers
https://open.substack.com/pub/safeesteem/p/your-survival-depends-on-it-but-you
This is certainly a messy topic and my goal was to tip the scales back slightly from 'safer' = 'better' because there are so many odd angles on it.
A quick corollary:
“It’s the strong swimmers who drown”
Even confidence in your own abilities can lower your perception of risk. If you’re a strong swimmer, you are more likely to take risks in the open water that someone who is a weak swimmer would not take.
If you are a skilled MMA fighter, you might be tempted to fight a mugger with a gun who just wants your wallet. You may be successful, but attacking the person with gun, in most cases, is much riskier than simply complying.
Now, it’s still good to be a strong swimmer and to know how to fight, but the key is to not take blind or unnecessary risk.
In some cases, risk mitigations of small things are worth increasing the risk of larger things, provided that you can maintain the perceptions of those risks. It’s all about tradeoffs.
Understanding stuff like @Michael Woudenberg writes about in his newsletter are absolutely essential to being a leader or just a thinking person.
Totally! I saw this in freediving and my instructor kept reminding everyone that the better they got at freediving the more likely they were to die freediving.
Great post Michael. I wish public health experts would keep this in mind whenever they make predictions about the efficacy of a given measure.
Yeah, I wrote the framework of this in a series of posts during COVID because people were losing their minds and not realizing how much extra risk they were exposing themselves to.
Let me state up front: you should wear your seat belt any time you're in a car! It's just smart.
That said, I bet you can figure out where I'm going with this. People who care about me think I'm crazy if I don't put a seat belt on, and maybe they're right, but in my mind, I'm just going to pay very close attention during this particular drive.
Again, nobody else should do this. I'm just saying: I've done it.
I might have a better example from martial arts if I think about it for a bit.
It's a valid example.
I also thought about folks who wore those stainless steel gloves whenever chopping onions or whatever. People went fast and got sloppy, and you could still hurt yourself if you sliced into that mesh glove.
Cut gloves aren't a terrible idea but they don't stop stabs! I did slice a finger wide open gutting a fish a couple years back without the gloves. A cut glove in the off-hand isn't terrible
Oh yeah. For me, the simple formula of speed x quality x economics means I can do 2 of those 3 things really well. I tend to ignore speed completely these days if I'm ever cooking for someone else.
I haven't sliced my finger open in 20 years, knock wood.