Review: Risk Savvy – How to Make Good Decisions by Gerd Gigerenzer

Are you risk-literate?

Do you understand how reputable cancer treatment centers in the U.S. lie or mislead you by confounding statistics in their marketing?

Which preventive cancer screenings cause more harm than good? Which preventive cancer screenings are worth getting?

Gerd Gigerenzer’s Risk Savvy (find in a library) is a crash course in risk literacy and a fun romp through several areas in which understanding risk and uncertainty matters enormously: your health and medical care (including defensive medicine and preventive screenings), bank finance and your money, leadership, romance, terrorism, and various runaway panics – Do you remember mad cow disease and how many people died from it?*

I first encountered Gigerenzer while studying cognitive models that could be implemented in computational agents, and specifically, his highly-cited papers on “fast and frugal” heuristics for us boundedly-rational mortals. [Note to economists: this includes you.] While his academic papers are quite accessible, Risk Savvy (find in a library) feels approachable to an even wider audience.

What’s particularly fun and enjoyable about the book is that Gigerenzer doesn’t just pick on laypeople for not understanding risk, but he also picks on experts for not only communicating risk so poorly, but for often lacking risk literacy, themselves. He backs this up with experimental data collected from physicians, bankers, and executives, and uses as a foil some of the best experts at developing simple solutions to complex problems: children.

Gigerenzer includes practical tools that could revolutionize the way we communicate and think about risk – for example, discontinuing the use of relative risks with unspecified or poorly specified reference classes (e.g., a 20 percent risk reduction!) and instead using absolute risks (e.g., a reduction in risk from 5 in 1000 to 4 in 1000).

Gigerenzer also advocates the use of icon boxes and fact boxes (examples available from the Harding Center for Risk Literacy) when health professionals and health-related organizations communicate with individuals.

The concluding chapter suggests ways that we might revolutionize school by teaching risk literacy using simple tools from a very early age. Gigerenzer specifically focuses on applied statistical thinking, rules of thumb, and psychology of risk and suggests focusing these in three areas: health literacy, financial literacy, and digital risk competence. He backs his suggestions with experimental data demonstrating that children as young as the second grade can, when presented with statistical information in the proper format, learn to accurately calculate risk.

Overall, I enjoyed Gerd Gigerenzer’s Risk Savvy (find in a library) and recommend it to just about anyone, and especially to those working in health-related professions and anyone interested in making better decisions about their health, finances, and other areas of life.

*Over 10 years, about 150 people in all of Europe died of mad cow disease. In the same ten years, the other cause that led to an equivalent number dying was drinking scented lamp oil.

Review: Risk Savvy – How to Make Good Decisions by Gerd Gigerenzer

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