The Effects of Time on Anticipated Consequences of Risks

Transcription

1 CREATE Research Archive Research Project Summaries 2011 The Effects of Time on Anticipated Consequences of Risks L. Robin Keller University of California - Irvine, Lrkeller@uci.edu Follow this and additional works at: Recommended Citation Keller, L. Robin, "The Effects of Time on Anticipated Consequences of Risks" (2011). Research Project Summaries. Paper This Article is brought to you for free and open access by CREATE Research Archive. It has been accepted for inclusion in Research Project Summaries by an authorized administrator of CREATE Research Archive. For more information, please contact gribben@usc.edu.

2 National Center for Risk and Economic Analysis of Terrorism Events University of Southern California Los Angeles, California The Effects of Time on Anticipated Consequences of Risks October 2010 to September 2011 L. Robin Keller University of California, Irvine "This research was supported by the United States Department of Homeland Security through the National Center for Risk and Economic Analysis of Terrorism Events (CREATE) under Cooperative Agreement 2007-ST-061-RE0001. However, any opinions, findings, and conclusions or recommendations in this document are those of the authors and do not necessarily reflect views of the United States Department of Homeland Security or the University of Southern California." Cooperative Agreement No ST-061-RE0001 Department of Homeland Security December 31, 2011

3 ABOUT CREATE The National Center for Risk and Economic Analysis of Terrorism Events (CREATE) was the first university-based Center of Excellence (COE) funded by University Programs of the Science and Technology (S&T) Directorate of the Department of Homeland Security (DHS). CREATE started operations in March of This annual report covers the seventh year of CREATE funding from October 2010 to September 2011, the first year under Cooperative Agreement 2010-ST-061-RE0001 from DHS. While the text of this report focuses on the seventh year, all data tables, publications, lists of participants, students, and presentations and events are cumulative from the inception of CREATE. CREATE s research mission is to develop advanced models and tools for risk assessment, economic assessment, and risk management to counter terrorism. CREATE accomplishes this mission through an integrated program of research, education, and outreach, spanning the disciplines of economics, psychology, political science, industrial and systems engineering and information science. CREATE develops models, analytical tools, methodologies and software, and tests these tools in case analyses, representing critical homeland security investment and policy decisions. Due to the cross-cutting nature of research in risk, economics, and risk management, CREATE serves the need of many client agencies at the DHS, including the Transportation Security Agency, Customs and Border Protection, Immigration and Customs Enforcement, FEMA and the US Coast Guard. In addition, CREATE has developed relationships with clients in the Offices of National Protection and Programs, Intelligence and Analysis, General Council, Health Affairs, and Domestic Nuclear Detection. Using a mix of fundamental and applied research, CREATE faculty and students take both the long-term view of how to reduce terrorism risk through fundamental research and the medium-term view of how to improve the cost-effectiveness of counter-terrorism policies and investments through applied research. Please visit for more information. 2

4 The Effects of Time on Anticipated Consequences of Risks L. Robin Keller, University of California, Irvine 1. Executive Summary Research Accomplishments Applied Relevance Collaborative Projects Publications and Reports Presentations Conferences Presentations Outreach Education 7 1. Executive Summary This on-going project investigates the role of time delays in the anticipation of risk consequences involving large impacts, low probabilities, and long temporal distance. Comparison between terrorism risks and natural disasters or monetary risks will be made in terms of the time effects. This progress report covers the first 6 months of funding, through September 30, A separate subcontract will be written for the completion of the project, ending Sept. 30, We investigate the role of time in anticipating consequences of monetary, terrorism, or natural disaster risks. Reactions to such risks can vary by how far in the future the anticipated risks are objectively or seem to be subjectively. First, we are conducting experiments on people s perceptions of risks with large potential impacts, low probabilities and short or long temporal distances, to explore how the saliency of factors (such as probability or magnitude of losses) changes over time. When two potential risk events vary only in the probability of loss, there may be larger differences in perceived risk between the two events when they occur at a future time than when they occur in the present, according to a construal level theory interpretation. In contrast, when risk events vary only by the amount of loss, there may be smaller differences in perceived risks for events in the future. Other theoretical perspectives might suggest other patterns of risk perception, such as patterns emanating from varying subjective perceptions of the length of elapsed time. Next, we will investigate the impacts of ambiguity in the time span (with precise time descriptions vs. ambiguous time descriptions) on anticipated risks. Terrorism risks and natural disaster risks are likely to vary on the level of ambiguity in their possible timing. When the time span in which a potential event might occur is varied in length, we anticipate differences in perceived risk patterns when the time span will occur in the near future vs. in more future time periods. 2. Research Accomplishments The overall objectives for the two-year project are to (a) develop a more comprehensive method for assessing perception of risk consequences by including the time of the event; (b) test if and how perceived riskiness varies for events happening at different times; (c) add the time factor in a perceived risk model; 1 This research was supported by the United States Department of Homeland Security through the National Center for Risk and Economic Analysis of Terrorism Events (CREATE) under subaward number to UC Irvine. However, any opinions, findings, and conclusions or recommendations in this document are those of the authors and do not necessarily reflect views of the United States Department of Homeland Security, or the University of Southern California, or CREATE. 3

5 (d) test the role of ambiguous time in people s reaction to risky events; and (f) develop a more effective framework for authorities to develop response plans for various types of risks. In the first six months of the project, experimental survey questions to assess the perceived riskiness of terrorism or natural hazard risks (and risks with monetary outcomes) at different precisely identified points in time have been designed and pretested. Magnitudes of outcomes and probabilities are varied across questions and across experimental treatments. Human subjects approval has been attained. Data collection is ongoing, so it is too early to report the experimental results. Under the subaward to UC Irvine, a research assistant was funded in summer 2011 and experimental subjects providing responses to experimental surveys received monetary compensation. Research talks on this were planned and invited/accepted to be given at two major Fall 2011 conferences (INFORMS and Society for Risk Analysis). 3. Applied relevance Our research results will help in developing a useful framework for evaluating anticipated risk consequences, which can be used by DHS to deliver information on anticipated consequences of future societal or natural risks to the public. Based on a construal level theory perspective and our preliminary results (still to be confirmed with extensive data collection), a practical implication may be that people will tend to underestimate future risks which have a relatively low probability but large potential loss (e.g., terrorist attacks, global warming, flooding, or earthquakes). This will potentially help members of the general public make accurate judgments of future risks and also motivate them to react appropriately to future risks (such as terrorism events and natural disasters due to global warming). 4. Collaborative Projects Two projects at UC Irvine are related to the topic of this project. National Science Foundation Dissertation Grant, , Doctoral Dissertation Research in DRMS: Decision Research on Time, Risk, and Ambiguity. L. Robin Keller (PI), Yitong Wang (Co-PI). UCI Environment Institute Grant, Winter 2009-, Principal Investigators: Bill Tomlinson (Informatics), Brett Sanders (Civil & Environmental Engineering), and L. Robin Keller (Merage School), Using IT to Compress Perceived Time and Space in How People Think About Global Change: A Step Towards Behavioral Change. Many people find it difficult to engage with environmental issues, in part because global change occurs on scales of time and space that are relatively large compared to the usual scope of human decision making. People respond enthusiastically to fast-acting disasters such as fires and earthquakes, but less so to issues that occur more gradually over many years, even when the consequences are far greater. To date, there has been little research on how to connect long-term global environmental change to human scales of time and space in a systematic way, thereby enabling behavioral change. Our efforts will focus on the science and public perception of sea level rise.) 4

6 COLLABORATIVE PROJECTS Project Title Institution Contact Name CREATE Lead Status National Science Foundation Doctoral Dissertation Research in DRMS: Decision Research on Time, Risk, and Ambiguity Using IT to Compress Perceived Time and Space in How People Think About Global Change: A Step Towards Behavioral Change 5. Publications and Reports UC Irvine UC Irvine National Science Foundation UCI Environment Institute Grant UCI Environment Institute Grant L. Robin Keller Yitong Wang graduated L. Robin Keller In progress CREATE PUBLICATIONS Research Area Refereed Not Refereed PDF Available for DHS NONE published in the first 6 months of the project based on the specific experiments funded under the project Related publications by project personnel Yitong Wang, Decision Research on Time, Risk, and Ambiguity, Doctoral dissertation, University of California, Irvine, Summer 2011 James M. Leonhardt, L. Robin Keller and Cornelia Pechmann, Avoiding the Risk of Responsibility by Seeking Uncertainty: Responsibility Aversion and Preference for Indirect Agency When Choosing for Others, Journal of Consumer Psychology, Volume 21, Issue 4, Pages (October 2011). Decision and risk analysis Behavioral decision theory X X Can be provided Can be provided Book authored by the Committee, which includes ROBERT S. LAWRENCE (Chair), JEFFREY B. BENDER, FRANCISCO DIEZ- GONZALEZ, KATHRYN M. EDWARDS, SUSAN S. ELLENBERG, PAUL S. FISCHBECK, KAREN E. JENNI, HELEN H. JENSEN, L. ROBIN KELLER, JAMES D. MCKEAN, DAVID O. MELTZER, SANFORD A. MILLER, RICHARD PLATT, JOHN T. WATSON, A Risk- Characterization Framework for Decision-Making at the Food and Drug Administration, Committee on Ranking FDA Product Categories Based on Health Consequences Phase II Report Book (May 2011), Board on Environmental Studies and Toxicology, Division on Earth and Life Studies, National Research Council, Institute of Medicine, Sponsored by the U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, for the FDA. Decision/ Decision and risk analysis X See weblink 5

7 6. Presentations Conferences 1. Tianjun Feng, L. Robin Keller, Yitong Wang, Time Inconsistency of Risk Perception, invited presentation in session chaired by L. Robin Keller and Tianjun Feng, INFORMS conference, Nov. 2011, Charlotte, NC: Time inconsistency of preference has been studied by numerous researchers. However, little attention has been paid on time inconsistency of risk perception. In this talk we try to test people s intertemporal changes in their risk perception on abstract gambles. And we found that at different time points, probabilities of losses and potential losses had different roles. 2. Tianjun Feng, L. Robin Keller, Yitong Wang, Time Inconsistency of Risk Perception, oral talk accepted for presentation at the Society for Risk Analysis conference, Dec. 2011, Charleston, SC. In this paper we investigate inter-temporal changes of risk perceptions in decisions under uncertainty. Time inconsistency of preference has been well documented in the literature, but any possible time inconsistency of risk perception has not received much attention. Two competing theories predict opposite results. The risk-as-feelings hypothesis (Loewenstein et al., 2001) states that payoffs and probabilities have different roles: when more emotional, people are less sensitive to variation in probability and more sensitive to variation in payoffs. Thus it predicts that an increment in time delay before receiving a binary gamble will lead to a higher impact of probability and a lower impact of payoff on risk perception when judged in the present time, assuming larger temporal distance leads to less emotional reactions. However, construal level theory (Liberman at al., 2002) and time-dependent gambling (Sagristano et al., 2002) proposed that probability is subordinate to payoff in preferences for gambles, which means payoffs can be regarded as being at a higher level of construal in gambles while probabilities can be regarded as at a lower level. This predicts temporal distance increases the influence of payoffs and decreases the influence of probability on preferences. In this study, we propose that temporal distance has different influences on attributes of a decision alternative with respect to risk perception as well. Experiments are conducted with hypothetical scenarios to examine this proposition where either probability (payoff) is controlled to estimate the influence of time and the payoff (probability) and provide a detailed discussion of our empirical results. Research results will help in developing a useful framework for evaluating anticipated risk consequences, which can be used by DHS to deliver information on anticipated consequences of future societal or natural risks to the public. Possible implications on risk perception of terrorism risks and natural disasters are discussed. 7. Presentations Outreach 1. L. Robin Keller, How to Make Smart Choices, Irvine Presbyterian Church, Primetimers, May 19,

8 8. Education Last Name First Name 1. Wang Yitong UC Irvine 2. Wan Raymond UC Irvine 3. Huynh Candice UC Irvine CREATE STUDENTS University School Department Degree Research Area Funded Merage School of Business Merage School of Business Merage School of Business Operations and Decision Technologies Operations and Decision Technologies Operations and Decision Technologies PhD Graduated summer 2011 BA Expected graduation March 2012 PhD Expected graduation June 2013 Decision and risk analysis Behavioral decision theory Decision and risk analysis, coastal floods Yes CREATE RELATED COURSES Instructor University Course Title 1. Keller UC Irvine Decision Theory 2. Keller UC Irvine Decision Analysis Education and Outreach Initiatives (Please detail below) # # of students supported (funded by CREATE) 1 # of students involved (funded by CREATE + any other programs) 3 # of students graduated 1 # of contacts with DHS, other Federal agencies, or State/Local (committees) # of existing courses modified with new material # of new courses developed # of new certificate programs developed # of new degree programs developed 7