Is Vice President Cheney a decision theorist? If so, is he a good one?
In his new book, The One Percent Doctrine, Ron Suskind quotes the Vice President as follows: “We have to deal with this new type of threat in a way we haven’t yet defined. . . . With a low-probability, high-impact event like this . . . If there’s a one percent chance that Pakistani scientists are helping al Qaeda build or develop a nuclear weapon, we have to treat it as a certainty in terms of our response.”
There is much to say about this extremely interesting statement. Most obviously, the Vice President appears to be endorsing a version of the Precautionary Principle, which is quite popular with many environmentalists. According to the Precautionary Principle, it is appropriate to respond aggressively to low-probability, high-impact events -- such as climate change. Indeed, another Vice President -- Al Gore -- can be understood to be arguing for a precautionary principle for climate change (though he believes that the chance of disaster is well over one percent).
But from the standpoint of decision theory, Vice President Cheney's remark, and the Precautionary Principle, run into a serious problem: a 1/100 chance of a bad outcome just isn't equivalent to a certainty of a bad outcome. (You wouldn't spend the same amount to avoid a 1/100 likelihood of a loss as a 100/100 likelihood of a loss.) So it is usual to challenge the Precautionary Principle on the ground that it leads to excessive precautions, simply because it treats low probabilities as certainties.
But in some contexts, we have to be careful with this criticism. To say the least, there is indeed a good reason to respond to a 1/100 chance that al Qaeda will obtain nuclear weapons. For practical purposes, a 1/100 chance of a real catastrophe might deserve something like the same response as a 100% chance of a real catastrophe. (To see the point, imagine a 1/100 chance of the destruction of the United States, or of the East Coast.) In the particular context in which Vice President Cheney offered the One Percent Doctrine, he made a good deal of sense -- certainly if he is taken to suggest that a firm response is necessary to avoid a 1% chance of a real catastrophe.
The problem, of course, is that a firm response might impose costs and create risks of its own. For climate change, the risk of catastrophe is probably over 1% (Nordhaus and Boyer, in their superb book on the topic, offer a higher figure, and their own numbers have been criticized as too low). But the task of reducing greenhouse gas emissions is very costly, and some alternative energy sources (such as nuclear power) impose risks of their own. For efforts to reduce the risk of terrorism, the same problems arise: Some of those efforts are very costly (in terms of money or important social values), and some of them create their own risks.
Much more thinking needs be done about the uses and limits of any One Percent Doctrine. And there is a great deal to learn by seeing when particular nations follow that doctrine, by taking low probability, high impact risks very seriously -- and when particular nations reject that doctrine, by treating those risks as far too speculative to deserve a response. (For relevant discussion, with an emphasis on terrorism and climate change, see here.)