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How To Decide What Risks Are Worth Taking

A method for making difficult choices

Life continuously presents us with difficult choices. Do we start our own business or stay in our (relatively) safe job? Do we absorb the high cost of health insurance or risk going uncovered because we're healthy now? Do we get the screening colonoscopy? Do we get married? Do we have children? Do we choose what's behind door #1 or door #2?

Every choice we make, big or small, easy or difficult, has potential benefits and risks. Many times we make choices based on emotional biases born of personal experience (we won't let anyone operate on our herniated disk because we know someone who awoke from the surgery in even worse pain). If we're not fully aware of the source of our biases, we risk basing our decisions on flawed reasoning. What we really need is a systematic way to sort through the risks and benefits of a choice that incorporates our personal values in order to make choices that give us the best chance to obtain the best outcomes for us.


Few choices are attended by only one risk, but luckily identifying the risks of a given choice is usually relatively straightforward, whether it's pain, unhappiness, embarrassment, failure, death, or something else.

Identifying the likelihood of these things actually happening is much more challenging. Hard data is, of course, best but isn't often available. When it's not, it may be helpful to ask an expert's opinion (though their estimation may be only slightly more informed than yours). Often, though, all we have to estimate risk is our own gut feeling. In such cases, it's helpful to quantify that feeling into a concrete percentage (making a commitment this way will force you to refine your estimate, much like writing your thoughts down forces you to clarify what you think).

Once armed with some understanding of the likelihood of each risk you face, the next step is to...


This is tricky as what we deem "significant" is both subjective and objective, relative and absolute. Subjective, because people have different levels of risk tolerance. Objective, because the likelihood of certain risks have been studied and are known in many circumstances (eg, drug side effects). Relative, because the potential benefits may outweigh the risks in one circumstance but not another (you may not be willing to risk liver failure to cure a toenail fungus, but you may be willing to take on the risk associated with donating a piece of your liver to save your child's life). Finally, absolute, because even if you are willing to risk your life, it remains your most precious possession regardless of the benefit that risking it may bring.

To determine if you personally find a risk significant requires us to make two calculations:

  1. Compare our personal risk tolerance to the objectively (or subjectively) assessed risk. How can you assess your tolerance for a particular risk in a meaningful way? Compare its likelihood to that of the riskiest thing you already do in your daily life. For me, this ends up being simply driving my car, which exposes me to a lifetime risk of death of approximately 1.2%. This may be only an estimate of one marker of my tolerance for risk, but it's a helpful way of putting other risks into perspective by enabling me to think about them as multiples of my risk of death from something I do nearly every day. For example, if my risk of dying from general anesthesia is approximately 0.17% (1985 data), it's only 1/10th my lifetime risk of dying in a car accident. If my lifetime risk of dying from smoking is approximately 8.3%, it's 8 times more than my risk of dying in a car accident. Of course, not every risk is equally undesirable. For example, the weightiness of the risk of pain is, for most people in most circumstances, far less than the weightiness of the risk of death (though, of course, for some people---perhaps those facing terminal illness---the opposite may be true). Because the point of this comparison is to help you grade your emotional risk tolerance in a more concrete and objective way, comparing apples to oranges is entirely permissible and useful (for example, comparing your lifetime risk of dying from a car accident to your risk, say, of stroke from being anticoagulated).
  2. Weigh the risk against the benefit. Benefit drives risk tolerance. If you stand to gain more than everyday benefit, you'll tolerate more than everyday risk. You not only have to weigh the risks and benefits of making a particular choice, however; you have to weigh the risks and benefits of not making it. I find it helps to draw diagrams. Include two charts, one for making the choice listing out the risks and benefits and one for not making the choice listing out the risks and benefits (or more if you're comparing multiple choices). Grade each risk and benefit to the best of your ability both in terms of probability of happening and importance to you. For example, the risk of death from anesthesia may only be 0.17% but on a scale of 1 to 10, the importance of avoiding death is probably a ten. The risk of mild pain from a cortisone shot in your shoulder maybe 90% but on a scale of 1 to 10, the importance of avoiding transient pain may only be a one. Putting numbers to these risks and benefits won't make your decision any easier but will help you decide which risks and benefits are significant enough to bother comparing.

The point of this method isn't to convince you your gut instincts are wrong but rather to create clarity around what your gut is actually telling you. You may still end up making the decision your gut suggests (and probably will) but if you've gone through this exercise at least then you can point back to it if you come to question or even regret your decision (especially if the outcome is worse than what you'd hoped for) to satisfy yourself you made the best decision you could with the knowledge you had at the time.

If you enjoyed this post, please feel free to explore Dr. Lickerman's home page, Happiness in this World.

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