Revealed Preferences:
Comments on the Starr BenefitRisk Relationships
Otway, H.J. and Cohen, J.J.
IIASA Research Memorandum
March 1975
Otway, H.J. and Cohen, J.J. (1975) Revealed Preferences: Comments on the Starr Benefit-Risk Relationships.
IIASA Research Memorandum. IIASA, Laxenburg, Austria, RM-75-005 Copyright © March 1975 by the author(s).
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REVEALED PREFERENCES:
COMMENTS ON THE STARR
BENEFIT-RISK RELATIONSHIPS
Harry J . Otway
J . J . Cohen
March 1975
Research Memoranda a r e informal p u b l i c a t i o n s
r e l a t i n g t o ongoing or p r o j e c t e d areas of research a t IIASA. The views expressed are
t h o s e o f t h e authors, and do n o t n e c e s s a r i l y
reflect t h o s e of IIASA.
REXTUED PFEFERENCES: COMMENTS ON THE
STARR BENEFIT-RISK
RELATIONSHIPS+
.nit
Harry J. Otway
J. J. Cohen
Abstract
S o c i e t a l preferences r e l a t e d t o r i s k acceptance form an important
input i n t o decisions a f f e c t i n g t h e s e l e c t i o n and deployment of larges c a l e technological systems. These preferences may be determined
e i t h e r by psychometric survey techniques o r through t h e a n a l y s i s of
recorded s t a t i s t i c a l data. The l a t t e r method, revealed preferences,
has been used, most notably by S t a r r , t o derive mathematical rel a t i o n s h i p s between s o c i e t a l b e n e f i t and technological risk.
In
t h i s paper t h e m e r i t s of t h e revealed preference approach a r e
summarized and t h e v a l i d i t y of t h e S t a r r q u a n t i t a t i v e r e s u l t s i s
examined. It i s concluded t h a t these r e s u l t s a r e excessively
s e n s i t i v e t o t h e assumptions made and t h e handling of d a t a and
t h a t t h e existence of simple mathematical r e l a t i o n s h i p s , based
Plans f o r
upon t h e revealed preferences method, i s unlikely.
f u r t h e r research i n determining s o c i e t a l preferences a r e outlined.
INTRODUCTION
A s technological systems have increased i n s i z e they have
o f f e r e d increasingly a t t r a c t i v e s o c i e t a l benefits, However, with
t h i s increase i n s c a l e t h e negative side-effects of technology
have a l s o become more noticeable - a s r e f l e c t e d i n t h e environmental concerns of recent years. Plans f o r f u r t h e r progress
a r e o f t e n being met by a v a r i e t y of individual and group demands
f o r c l o s e r examination of t h e b e n e f i t s and r i s k s of technologies;
a t t i t u d e s which regard much t h a t i s innovative as being p o t e n t i a l l y
harmful a r e being observed,
Thus decisions involving t h e s e l e c t i o n and deployment of
large-scale technologies have taken on an increased importance,
Y
Wt
The views expressed i n t h i s paper a r e those of t h e authors, and
do not n e c e s s a r i l y r e f l e c t those of t h e Project Sponsors.
I n t e r n a t i o n a l Atomic Energy Agency, J o i n t IAEA/IIASA
P r o j e c t , P.O. Box 590, Vienna, Austria,
Research
h t h s o c i e t a l a t t i t u d e s and a n t i c i p a t e d responses forming a vital
input i n t o decision making. A model i l l u s t r a t i n g t h e importance
of r i s k perception and s o c i e t a l preferences i n t h i s process has
been reported i n an e a r l i e r publication (Otway, 1975).
There a r e b a s i c a l l y two methods f o r determining preference s on t h e s o c i e t a l l e v e l : psychometric survey techniques;
and t h e revealed preferences approach, which r e l i e s upon t h e
a n a l y s i s of recorded s t a t i s t i c a l data. The l a t t e r method t r i e s
t o e x t r a c t from h i s t o r i c a l d a t a preferences revealed, e x p l i c i t l y
o r i m p l i c i t l y , i n past s o c i e t a l - l e v e l decisions and attempts t o
describe a normative pat t e r n f o r these decisions.
One of t h e b e t t e r known a p p l i c a t i o n s of t h e revealed preferences approach, as r e l a t e d t o technological r i s k s , i s t h a t of
S t a r r (1969, 1971, 1974) who, through t h i s pioneering work, was
instrumental i n s t i m u l a t i n g i n t e r e s t i n t h e general f i e l d of
applied risk-benefit a n a l y s i s and i n opening new l i n e s of enquiry.
The o b j e c t i v e of t h e S t a r r work w a s t o e s t a b l i s h a s e t of hypot h e s e s and c r i t e r i a which c o u l d b e used f o r national decisions
regarding t h e acceptable l e v e l of r i s k associated with larges c a l e technological systems. H i s t o r i c a l p a t t e r n s (revealed
preferences) were sought which might suggest broad p r i n c i p l e s
f o r t h i s purpose and s e v e r a l b a s i c mathematical r e l a t i o n s h i p s
between s o c i a l b e n e f i t and technological r i s k s were suggested with some q u a l i f i c a t i o n s a s t o t h e i r v a l i d i t y and t h e l i m i t a t i o n s of t h e method. These papers have been f r e q u e n t l y
c i t e d , o f t e n with i n s u f f i c i e n t q u a l i f i c a t i o n , with t h e quantit a t i v e r e l a t i o n s h i p s sometimes appearing t o be regarded as a
s e t of "quasi-laws" describing human behaviour i n r i s k s i t u a t i o n s .
One of our e a r l y research t a s k s w a s t o c r i t i c a l l y review
methods f o r t h e determination of s o c i e t a l preferences. I n l i g h t
of t h e inherent l i m i t a t i o n s found i n t h e method of revealed
preferences we were s t r u c k by t h e r a t h e r neat mathematical r e s u l t s
obtained by S t a r r through t h i s approach. This, i n t u r n , l e a d s
t o a more d e t a i l e d examination of t h e q u a n t i t a t i v e c o r r e l a t i o n s
themselves. The i n t e n t of t h i s paper i s t o summarize some
l i m i t a t i o n s of t h e revealed preferences approach (Section I1)
t o o u t l i n e t h e r e s u l t s and methodology of t h e S t a r r work
(Section 111), and, i n Section I V , t o review b a s i c premises
and t o attempt reproduction of t h e r e s u l t s . Conclusions a r e
presented i n Section V.
,
11.
REVEALED PREFERENCES
- GENERAL
COMMENTS
This approach has t h e obvious advantage of d e a l i n g with
a c t u a l s o c i e t a l decisions which have been made, e x p l i c i t l y o r
i m p l i c i t l y , i n t h e r e a l world and i s f r e e from t h e a r t i f i c i a l i t i e s
of t h e laboratory. However, t h e a p p l i c a t i o n of t h i s method re-
q u i r e s t h a t several assumptions be made which lead t o t h e disadvantages summarized below:
1.
Past is Prologue. This i s t h e core of t h e assumption
t h a t s o c i e t a l a t t i t u d e s revealed i n t h e past can be
applied i n t h e future. While t h i s may be t r u e i n some
cases, e s p e c i a l l y f o r s h o r t time periods, s o c i e t y i s
changing r a p i d l y - p r e c i s e l y because of technological
development. This assumption i s open t o question.
2.
Multiple Determination. Preferences r e l a t e d t o r i s k
acceptance a r e multiply determined) t h a t i s , many
f a c t o r s influence a t t i t u d e s toward risk. It i s not
c l e a r t h a t a l l a r e even known, l e t alone recorded i n
t h e d a t a base.
For example, individual and s o c i e t a l acceptance of
r i s k i s , i n general, predicated upon how r i s k s a r e
perceived, not by a c t u a l r i s k l e v e l s ; it i s known t h a t
man i s a poor i n t u i t i v e s t a t i s t i c i a n i n t h i s respect
( ~ l o v i c ,1971; Murphey and Winkler, 1973). Recorded
s t a t i s t i c a l d a t a reveal a c t u a l l e v e l s of r i s k ; how
r i s k s and b e n e f i t s were perceived at t h e time cannot
be r e f l e c t e d i n these data, nor can t h e socio-psychol o g i c a l mechanisms t h a t determined perception be recorded.
R a i f f a (1968) has pointed out t h e importance of informat ion quality. People have made t h e decisions
which generated t h e recorded d a t a on t h e b a s i s of
imperfect information. Decisions made i n t h e f u t u r e ,
w be
even i f a l l other conditions were constant, m
made with b e t t e r o r worse information and, t h e r e f o r e , w i l l
not n e c e s s a r i l y reproduce past outcomes.
3.
Importance of Physical Risks. More s p e c i f i c t o t h e
S t a r work, which emphasizes physical ( e s p e c i a l l y
m o r t a l i t y ) - r i s k s , is t h e observation t h a t t h e s e
r i s k s do not always play a dominant r a l e i n t h e
acceptance of a new technology. Risks a r e o f t e n
taken f o r s o c i a l reasons, such a s p r e s t i g e , etc.,
and i n t h e search f o r psychic b e n e f i t s thoughts of
physical r i s k may be subordinate t o , f o r example,
social risks.
#
These p o i n t s summarize the p r i n c i p a l arguments against using
t h e revealed preferences approach f o r determining v a l i d s o c i e t a l
preferences r e l a t e d t o r i s k acceptance. However, as mentioned
e a r l i e r , S t a r r has postulated some b a s i c mathematical r e l a t i o n s h i p s between s o c i e t a l b e n e f i t and technological r i s k u s i n g t h i s
method; h i s work w i l l be summarized i n t h e next section.
111. SUMMARY OF THE STARR WORK
I n t h i s s e c t i o n t h e important points of t h e S t a r r conclusions
w i l l be repeated and t h e methods used i n t h e i r d e r i v a t i o n reviewed.
This treatment i s n e c e s s a r i l y b r i e f
readers a r e encouraged t o study
one of t h e o r i g i n a l papers ( S t a r r , 1969, 1971, 1974) f o r a more
complete exposition. The 1969 paper w i l l be used f o r t h i s discussion
a s i t formed t h e b a s i s f o r t h e l a t e r work and t h e r e s u l t s were not
changed appreciably.
-
A.
The Assumptions
The S t a r r work p r e s e n t s 91an approach f o r e s t a b l i s h i n g a
q u a n t i t a t i v e measure of b e n e f i t r e l a t i v e t o cost f o r an important
element i n our spectrum of s o c i a l values - s p e c i f i c a l l y , f o r
a c c i d e n t a l deaths a r i s i n g from technological developments i n
public use. The a n a l y s i s i s based upon two assumptions:"
1.
2.
".....
t h a t h i s t o r i c a l n a t i o n a l accident records a r e
adequate f o r r e v e a l i n g consistent p a t t e r n s of f a t a l i t i e s
i n t h e public use of technology."
I1
.....
t h a t such h i s t o r i c a l l y revealed s o c i a l preferences
and c o s t s a r e s u f f i c i e n t l y enduring t o permit t h e i r use
f o r p r e d i c t i v e purposes."
The above quotes a r e from t h e 1969 paper and were paraphrased
i n t h e 1971 and 1974 papers.
B.
*
The 1969 9'Conclusions'1
" ( i ) The i n d i c a t i o n s a r e t h a t t h e public i s w i l l i n g t o accept
voluntary^ r i s k s roughly 1000 times g r e a t e r t h a t 'involuntary1 r i s k s .
( i i ) The s t a t i s t i c a l r i s k of death from d i s e a s e appears t o be
a psychological y a r d s t i c k f o r e s t a b l i s h i n g t h e l e v e l of
a c c e p t a b i l i t y of o t h e r r i s k s .
( i i i ) The a c c e p t a b i l i t y of r i s k appears t o be crudely prop o r t i o n a l t o t h e t h i r d power of the b e n e f i t s ( r e a l o r
imagined)
II
.....
Y
S t a r r d i d not use t h e word conclusions i n d i r e c t a s s o c i a t i o n
with these r e l a t i o n s h i p s . I n t h e 1969 paper they appeared i n
a s e c t i o n headed "Conclusionsw and i n a l l t h r e e publications
were r e f e r r e d t o a s " i n t e r e s t i n g point sN.
These t h r e e points were repeated, i n a somewhat d i f f e r e n t
form, i n t h e 1971 and 1974 papers. Further p o i n t s addressing
t h e f a c t o r s influencing public awareness, t h e a c c e p t a b i l i t y of
nuclear power and t h e significance of n a t u r a l haSard r i s k s
l e v e l s i n acceptance w i l l not be discussed here,
C.
The Methodology and Results
The i n t e n t here i s t o b r i e f l y follow through t h e methodology and d a t a presentations used i n reaching t h e p o i n t s l i s t e d
above. The f i g u r e s a r e presented i n t h e same order followed by
Starr.
1,
.
Risk proportional t o ( b e n e f i t ) 3
There a r e two b a s i c sources f o r t h i s r e s u l t : mining
wages and s o c i e t a l a c t i v i t i e s , It was noted t h a t
accident r a t e s f o r miners, exposed t o high occupational
r i s k s , were a function of t h e wage, roughly t h e t h i r d
power r e l a t i o n s h i p shown i n Figure 1.
Risks and b e n e f i t s were then estimated f o r s e v e r a l
voluntary and involuntary s o c i e t a l a c t i v i t i e s (Figure 2 )
and t h e third-power r e l a t i o n s h i p between b e n e f i t and
r i s k c h a r a c t e r i s t i c s was again s a i d t o be observed.
2.
Acceptability of voluntary r i s k s
volunt ary risks.
- 1000 timels t h a t
of i n -
The curves of Figure 2 f o r voluntary and involuntary
r i s k s show an approximate separation of t h r e e orders
of magnitude, t h u s providing t h e b a s i s f o r t h i s point.
3.
The s t a t i s t i c a l r i s k of death from disease a s a psychological yardstick f o r a c c e p t a b i l i t ~ ,
Several f i g u r e s were presented (such a s Figure 3) which
i l l u s t r a t e d t h a t p a r t i c i p a t i o n i n a c t i v i t i e s (cog., automotive t r a v e l , commercial a v i a t i o n ) increased as t h e
associated r i s k s decreased, Discussing Figure 3 i t was
s a i d : "It i s i n t e r e s t i n g t o note t h a t t h e present r i s k
l e v e l i s only s l i g h t l y below t h e b a s i c l e v e l of r i s k
from disease. I n view of t h e high percentage of t h e
population involved, t h i s probably represents a t r u e
s o c i e t a l jud ement on t h e a c c e p t a b i l i t y of r i s k r e l a t e d
t o benefit" S t a r r , 1969, 1971, 1974).
f
IV.
EVALUATION AND REPROWCEXBILITY OF THE STARR RESULTS
This s e c t i o n w i l l examine t h e v a l i d i t y of t h e foregoing applic a t i o n of t h e revealed preferences technique by repeating t h e a n a l y s i s
o u t l i n e d i n Section 111. C., using the same d a t a base.
i n methodology o r c a l c u l a t i o n w i l l be made.
1.
No changes
Risk proportional t o ( b e n e f i t ) j
a.
Mining Wages
Figure 1 i n d i c a t e d a cubic r e l a t i o n s h i p between miners'wages
and occupational r i s k s . Otway (1973) pointed out t h a t t h e
t o t a l wage should not be viewed a s r i s k compensation; workers
exposed t o minimal occupational r i s k s t i l l receive a wage f o r
b a s i c services. A review of wage s c a l e s f o r bituminous coal
mining i n d i c a t e s t h a t an average compensation f o r b a s i c
sertiices i n 1967 was about $ 2.00 per hour (U.S. Dept. of
Labor, 1967). References i n wage and s a l a r y administration
( O t i s and Leukart, 1954; National Metal Trades, 1974) i n d i c a t e
t h a t , i n e s t a b l i s h i n g i n d u s t r i a l wage s c a l e s , job hazard
accounts a t most f o r 10 5 of t o t a l wages. Subtracting $ 2.00
per hour from t h e wages of f i g u r e 1 t o form " r i s k compensation"
wages, i n d i c a t e s an e s s e n t i a l l y l i n e a r r e l a t i o n s h i p between
r i s k and benefit. Figure 4 shows a comparison between r i s k
compensation wage and the t o t a l wage d a t a of Figure 1 with
regression l i n e s .
A f u r t h e r review of mining wage d a t a (u.s.
Dept. of Labor,
1967) i n d i c a t e s t h a t wages i n l a r g e r coal mines were generally
higher than i n smaller mines, although t h e smaller mines had
higher accident r a t e s . This a l s o implies t h e e f f e c t of v a r i a b l e s
other than r i s k upon wages.
Connoly and Mamr (1971), using t h e S t a r r aggregate wage
approach, included d a t a from other mining i n d u s t r i e s and
various S t a t e s of t h e USA. With t h e s e a d d i t i o n a l d a t a p o i n t s
they concluded t h a t t h e I8inference of a general t hird-power
r e l a t i o n s h i p , o r any r e l a t i o n s h i p , does not appear t o be
justified".
b,
S o c i e t a l A c t i v i t i e s (~01untarr;y)
Having gained t h e impression from t h e foregoing t h a t a
third-power r e l a t i o n s h i p between b e n e f i t and r i s k does
not n e c e s s a r i l y e x i s t , t h e third-power r e l a t i o n s h i p shown
i n figure 2 may be investigated. The o r i g i n a l voluntary
r i s k d a t a , taken d i r e c t l y from Figure 2, a r e f i t t e d best
t o a regression equation i n d i c a t i n g r i s k t o be proportional
t o b e n e f i t t o t h e 1.8 power.
h he o r i g i n a l S t a r r d a t a and
t h e regression l i n e a r e shown i n Figure 5.)
c,
Societal Activities (~nvoluntary)
The "involuntary" curve of Figure 2 c o n s i s t s of f o u r d a t a
points: motor vehicles, commercial a v i a t i o n , e l e c t r i c power
and n a t u r a l hazards ( ~ t a r r ,1975). The appendices of t h e
S t a r r papers i n d i c a t e t h a t no b e n e f i t w a s assigned t o the
n a t u r a l hazards point, therefore, i t w a s a r b i t r a r i l y placed
a1ong t h e b e n e f i t axis.
Disregarding n a t u r a l hazards, a regression l i n e may be f i t t e d
t o the remai i n g o r i g i n a l data. This y i e l d s an equation of
t h e form R B203 - a s i x t h power r e l a t i o n s h i p f o r involuntary
risks.
( s e e Figure 5 ) .
2.
Acceptability of voluntary r i s k s -1000
times t h a t of involuntary r i s k s .
Although i t appears t h a t an element of personal control over
outcome and the p o s s i b i l i t y of avoiding r i s k exposure (i.e., voluntary
r i s k taking) play an important p a r t i n r i s k acceptance, any numerical
r e l a t i o n s h i p between voluntary and involuntary r i s k acceptance, based
upon t h e S t a r r d a t a (shown with f i t t e d curves i n Figure 5 ) , where t h e
r e l a t i o n s h i p s f o r voluntary and involuntary a c t i v i t i e s i n t e r s e c t ,
would seem speculative.
3.
The s t a t i s t i c a l r i s k of death from disease as a psychological
y a r d s t i c k f o r acceptability.
A s discussed e a r l i e r ( s e c t i o n 111. C. 3) curves such as f i g u r e
3 were used t o show t h a t p a r t i c i p a t i o n i n many a c t i v i t i e s increased
as r i s k s decreased with "a t r u e s o c i e t a l judgement on t h e a c c e p t a b i l i t y
of r i s k i n r e l a t i o n t o benefit" being reached as p a r t i c i p a t i o n became v i r t u a l l y universal and r i s k l e v e l l e d at a value near t h a t t o
death from n a t u r a l causes.
While t h i s may be t r u e , although t h e mechanism i s not obvious,
curves such as Figure 3 do not demonstrate a cause-effect r e l a t i o n s h i p between p a r t i c i p a t i o n and risk.
S t a r r did not claim t h a t
cause-effect had been shown but t h i s impression could be obtained from
t h e figures. P a r t i c i p a t i o n i n risk-bearing a c t i v i t i e s i s multiply
determined; o t h e r v a r i a b l e s besides r i s k l e v e l s , e.g.,
economic,
may a l s o influence participation.
This century has been a time of
a period of i n d u s t r i a l i z a t i o n
great s o c i a l change i n t h e U.S.A.,
and i n c r e a s i n g personal wealth.
Figure 6 shows, f o r example, a
p l o t of disposable personal income and p a r t i c i p a t i o n i n automotive
It may be observed t h a t i n t h e period when
t r a v e l vs. time.
automotive p a r t i c i p a t i o n increased by a f a c t o r of 7 o r so, personal
disposable income, i n constant d o l l a r s , increased by a f a c t o r of
It i s not unreasonable t o hypothesize t h a t as incomes
about 4.
increased t h e automobile was economically within t h e reach of more
people, t h u s increasing participation.
The point here i s not t o
p o s t u l a t e an a l t e r n a t i v e cause-effect r e l a t i o n s h i p but t o suggest
t h a t any hypothesis about p a r t i c i p a t i o n i n such a c t i v i t i e s being
s t r o n g l y influenced by r i s k l e v e l s approaching t h a t from n a t u r a l
causes should not be regarded as conclusive.
-
4.
General Remarks.
The number of s t a t i s t i c a l v a r i a b l e s recorded i s l i m i t e d and
i t i s , t h e r e f o r e , necessary t o make a number of assumptions i n
performing such analyses. Using equally reasonable, but d i f f e r e n t ,
especially
assumptions could produce q u i t e d i f f e r e n t results
This
has
not
been
done
here;
the original
with regard t o Figure 2.
d a t a f o r voluntary and involuntary a c t i v i t i e s have merely been
f i t t e d t o computer-determined power curves i n order t o o b j e c t i v e l y
t e s t t h e appropriateness of t h e q u a n t i t a t i v e correlations.
-
The reader may wish t o examine some of these o r i g i n a l d a t a
p o i n t s i n d e t a i l i n order t o get an i d e a of the u n c e r t a i n t i e s
introduced through some of t h e assumptions necessary t o compensate
f o r inadequacies i n t h e d a t a base.
For example, the S t a r r method
f o r determining t h e s o c i e t a l b e n e f i t of e l e c t r i c a l power i s based
upon t h e possible change i n per c a p i t a CNP i f e l e c t r i c i t y were not
available.
I n view of t h e c o r r e l a t i o n between energy consumption
and GNP, and t h e assumption t h a t 35 $ of t h e energy consumed i n
t h e USA i s used t o produce e l e c t r i c i t y , S t a r r assigned a per
c a p i t a b e n e f i t of about $ 1,000 t o e l e c t r i c power (almost 25 $ of
t h e U.S. per c a p i t a GNP).
An a l t e r n a t i v e value may be suggested
through a somewhat d i f f e r e n t approach: The U.S. S t a t i s t i c a l Abstracts
(1973) i n d i c a t e t h a t t h e U.S. gross product f o r " E l e c t r i c i t y , Gas
and Sanitary Services" i s $ 25,000 million. Even i f t h i s were a l l
a t t r i b u t e d t o e l e c t r i c i t y t h e per c a p i t a b e n e f i t would be only
about $ 100. This i s not t o imply t h a t one number or method i s
only t o show t h a t d i f f e r e n t
c o r r e c t and the o t h e r i n c o r r e c t
assumptions can produce r a t h e r l a r g e changes i n t h e l o c a t i o n of
d a t a points.
-
E'inally, i t must be observed t h a t t h e d a t a of Figures 2 and
5 do not r e a l l y j u s t i f y t h e use of computer-fitted curves which,
due t o t h e l i m i t e d number of d a t a points, a r e extremely s e n s i t i v e
t o a change i n l o c a t i o n of a s i n g l e point. Regression analyses were
used s o l e l y t o o b t a i n an i m p a r t i a l t e s t of t h e cubic r e l a t i o n s h i p s which had been postulated.
It seems d i f f i c u l t t o obtain
adequate information on a s i g n i f i c a n t l y l a r g e number of s o c i e t a l
a c t i v i t i e s t o allow broad g e n e r a l i z a t i o n s of the type sought by
S t a r r . This appears t o be another l i m i t a t i o n of t h e method.
V.
CONCLUSIONS
I t must again be emphasized t h a t t h e i n t e n t of t h i s paper w a s
not t o question t h e value of t h e S t a r r work i n general, but merely
t o t e s t t h e v a l i d i t y of q u a n t i f i e d risk-benefit c o r r e l a t i o n s based
S t a r r himself d i d not
upon t h e method of revealed preferences.
place a g r e a t deal of s t r e s s upon t h e v a l i d i t y of t h e r e l a t i o n s h i p s
themselves
as may be seen by t h e caveats he q u i t e properly placed
i n h i s papers.
Our concern was t h a t , due t o encouragement given by
t h e elegant s i m p l i c i t y of t h e mathematical r e s u l t s , too much r e l i a n c e
i s being placed on h i s t o r i c a l s t a t i s t i c a l d a t a alone a s a source of
revealed s o c i e t a l preferences.
-
It i s concluded t h a t t h e r e s u l t s of t h i s method appear t o be
excessively s e n s i t i v e t o t h e assumptions made and t h e handling of
data; t h e present existence of any such mathematical risk-benefit
r e l a t i o n s h i p s , based upon t h i s approach, would seem unlikely.
There i s c l e a r l y some r e l a t i o n s h i p between t h e b e n e f i t perceived t o be derived from an a c t i v i t y and t h e perceived c o s t s of
p a r t i c i p a t i o n . The r e l a t i o n s h i p s a r e , however, not simple mathematical ones but complicated and s t r o n g l y influenced by sociopsychological mechanisms which a r e a s y e t not well understood.
The research programme of t h e J o i n t IAEA/IIASA Research Project
includes the expansion of t h e revealed preferences approach
using an i t e r a t i v e process of empirical, multi-variable a n a l y s i s
combined with behavioural theories. These analyses w i l l a l s o
help t o define i n p u t s t o a p a r a l l e l e f f o r t i n t h e design and
a p p l i c a t i o n of psychometric surveys. This research has been
described i n an e a r l i e r publication ( ~ t w a y , 1975) and i s d i r e c t e d
at i d e n t i f y i n g t h e f a c t o r s influencing the perception and acceptance of technological r i s k s i n order t h a t s o c i e t a l a t t i t u d e s and
a n t i c i p a t e d responses m v be b e t t e r i n t e g r a t e d i n t o decision making.
Aclmowl edgement
The authors would l i k e t o thank Chauncey S t a r r and Ric
Fudman of the E l e c t r i c Power Research I n s t i t u t e , Palo Alto,
C a l i f o r n i a , USA, f o r t h e i r comments upon an e a r l i e r d r a f t of
t h i s publication.
2.00
2.50
3.0 0
3.50
4.00
HOURLY WAGE (DOLLARS)
4.50
FIGURE 1
Mining Accident Rates v s . Incentive ( Starr 1969,1971,1974 )
-%
LL
ra-9
R = Risk
6 = Berlefit
dI
200
I
I
I
500
I
r
1
_
1
~
~
1000
2 000
5 000
Average annual benetit / person involved [ Dsllars 1
FIGURE 2
R i s k v s . Benefit: Voluntary and Involuntary E x p o s u r e ( S t a r r 1969,
1971, 1974).
10 GC3
1900
1920
1940
YEAR
1960
FIGURE 3
R i s k and P a r t i c i p a t i o n T r e n d s f o r M o t o r Vehicles ( S t a r r 1969, 1971, 1974).
COMPENSATION ( DOLLARS/ HOUR)
FIGURE 4
Mining Accident R a t e s vs. Total Wage and Risk
Corn pens a t ion
FIGURE
5
Risk vs. Benefit : Regression Lines f o r Voluntary
and Involuntary Exposure ( original S t a r r data )
YEAR
FIGURE 6
Disposable Personal Income and Participation Trends f o r Motor Vehicles.
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