We humans are terrible at dealing with probability. We are not merely bad at it, but seem hardwired to be incompetent, in spite of the fact that we encounter innumerable circumstances every day which depend on accurate probabilistic calculations for our wellbeing. This incompetence is reflected in our language, in which the common words used to convey likelihood are "probably" and "usually" — vaguely implying a 50% to 100% chance. Going beyond crude expression requires awkwardly geeky phrasing, such as "with 70% certainty," likely only to raise the eyebrow of a casual listener bemused by the unexpected precision. This blind spot in our collective consciousness — the inability to deal with probability — may seem insignificant, but it has dire practical consequences. We are afraid of the wrong things, and we are making bad decisions.
Imagine the typical emotional reaction to seeing a spider: fear, ranging from minor trepidation to terror. But what is the likelihood of dying from a spider bite? Fewer than four people a year (on average) die from spider bites, establishing the expected risk of death-by-spider at lower than one in a hundred million. This risk is so minuscule that it is actually counterproductive to worry about it! Millions of people die each year from stress-related illnesses.
The startling implication is that the risk of being bitten and killed by a spider is less than the risk that being afraid of spiders will kill you from increased stress. Our irrational fears and inclinations are costly. The typical reaction to seeing a sugary donut is the desire to consume it. But, given the potential negative impact of that donut, including the increased risk of heart disease and reduction in overall health, our reaction should rationally be one of fear and revulsion. It may seem absurd to fear a donut — or, even more dangerous, a cigarette — but this reaction rationally reflects the potential negative impact on our lives.
We are especially ill-equipped to manage risk when dealing with small likelihoods of major events. This is evidenced by the success of lotteries and casinos at taking peoples' money, but there are many other examples. The likelihood of being killed by terrorism is extremely low, yet we have instituted actions to counter terrorism that significantly reduce our quality of life. As a recent example, x-ray body scanners could increase the risk of cancer to a degree greater than the risk from terrorism — the same sort of counterproductive overreaction as the one to spiders. This does not imply we should let spiders, or terrorists, crawl all over us — but the risks need to be managed rationally.
Socially, the act of expressing uncertainty is a display of weakness. But our lives are awash in uncertainty, and rational consideration of contingencies and likelihoods is the only sound basis for good decisions. As another example, a federal judge recently issued an injunction blocking stem cell research funding. The shallowly viewed implication is that some scientists won't be getting money; but what is really at stake is much more important. The probability that stem cell research will quickly lead to life saving medicine is low, but, if successful, the positive impact could be huge. If one considers outcomes and approximates the probabilities, the conclusion is that the judge's decision destroyed the lives of thousands of people, based on probabilistic expectation.
How do we make rational decisions based on contingencies? That judge didn't actually cause thousands of people to die... or did he? If we follow the "many worlds" interpretation of quantum physics — the most direct interpretation of its mathematical description — then our universe is continually branching into all possible contingencies, and there is a world in which stem cell research saves millions of lives, and another world in which people die because of the judge's decision. Using the "frequentist" method of calculating probability, we have to add the probabilities of the worlds in which an event occurs to obtain the probability of that event.
Quantum mechanics dictates that the world we experience will happen according to this probability — the likelihood of the event. In this bizarre way, quantum mechanics reconciles the frequentist and "Bayesian" points of view, equating the frequency of an event over many possible worlds with its likelihood. An "expectation value," such as the expected number of people killed by the judge's decision, is the number of people killed in the various contingencies, weighted by their probabilities. This expected value is not necessarily likely to happen, but is the weighted average of the expected outcomes — useful information when making decisions. In order to make good decisions about risk we need to become better at these mental gymnastics, improve our language, and retrain our intuition.
Perhaps the best arena for honing our skills and making precise probabilistic assessments would be a betting market — an open site for betting on the outcomes of many quantifiable and socially significant events. In making good bets, all the tools and shorthand abstractions of Bayesian inference come into play — translating directly to the ability to make good decisions. With these skills, the risks we face in everyday life would become clearer, and we would develop more rational intuitive responses to uncalculated risks, based on collective rational assessment and social conditioning.
We might get over our excessive fear of spiders, and develop a healthy aversion to donuts, cigarettes, television, and stressful full-time employment. We would become more aware of the low cost compared to probable rewards of research, including research into improving the quality and duration of human life. And, more subtly, as we became more aware and apprehensive of ubiquitous vague language, such as "probably" and "usually," our standards of probabilistic description would improve.
Making good decisions requires concentrated mental effort; and if we overdo it we run the risk of being counterproductive through increased stress and wasted time. So it's best to balance, and play, and take healthy risks — as the greatest risk is that we'll get to the end of our lives having never risked them on anything.