Security Isn't Free, Either

Economics,Ideas,Reading — Zac Townsend @ October 30, 2012 9:30 am

On the tradeoff between risk and reward. It begins with a simple anecdote:

I once heard a Harvard professor give a talk describing the yumminess vs. safety scale for food regulation. Yummy food (yes, I’m quoting here) is frequently unsafe, and safe food rarely yummy. Head to the Texas border, he said, to see it in action. The same ingredients are used in burritos on either side of the border, but the Mexican version, with its unpasteurized cheese and fresher, unmedicated chicken, bursts with both flavor and, occasionally, Salmonella. The American version is recognizable as a burrito but has little taste in common with its more daring cousin. We’ve sacrificed some deliciousness in favor of safety.

But don't be fooled, this guy has things to say:

Such questions are the stuff of nightmares and of responsible government, and the abilities to humanely understand, resolve and – most of all – explain their nuances are the differences between great leaders and tyrants.

I have been very interested lately in thinking about risks and too which extents government should go to mitigate them. I don't have anything fully formed on the topic yet, but is pretty obvious that as the limit reaches probability zero on any risk the cost function approaches infinity. That is, it gets more and more expensive to decrease smaller and smaller risks toward making something not happen with probability one. That might be worth it if the risk is nuclear attack on New York, but it makes less sense in the case of things the government avoids just because they look bad.

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