Rationalization

People wouldnt fly personal aircraft-or participate in many other activities-if there werent benefits. Thats human nature. Some benefits we seek by taking risks are intangible and hard to quantify. Others can be readily identified and weighted. Its a calculus we all employ daily in mundane ways. However, the problem isnt that we fail to assess benefits when we analyze risk. Instead, the issue is the inaccurate values we assign on both sides of the equation.

Joseph E. (Jeb) Burnside

Thursday, June 21, 2018 at 12:00 AM ET

Verified

Key Takeaways:

Effective risk assessment is a risk/benefit analysis where potential benefits should clearly outweigh the associated risks.
The fundamental problem in risk/benefit analysis is the human tendency to inaccurately assign values to both risks and benefits, especially intangible ones.
This inaccuracy is often compounded by rationalization, where individuals manipulate perceived values of risks and benefits to justify desired outcomes, even when those decisions are unsound.

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In a submission to our Unicom department on the opposite page, Jeff Schweitzer makes the point that risk “should only be taken when the potential benefit clearly exceeds the risk, and that cannot be known if half the equation is excluded from analysis.” In other words, to properly assess risk, we also have to balance the equation by calculating the benefits of taking that risk. It’s really a risk/benefit analysis instead. He’s not wrong.

People wouldn’t fly personal aircraft—or participate in many other activities—if there weren’t benefits. That’s human nature. Some benefits we seek by taking risks are intangible and hard to quantify. Others can be readily identified and weighted. It’s a calculus we all employ daily in mundane ways. However, the problem isn’t that we fail to assess benefits when we analyze risk. Instead, the issue is the inaccurate values we assign on both sides of the equation.