Why Some People Are Better at Assessing Risk Than Others

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One of the most prominent features of our cognitive apparatus is our ability to understand and reason about risk. Don’t believe me? Consider a typical day in your life. Your morning routine may involve a breakfast choice of either a not-so-healthy, calorie-dense platter of bacon and eggs or perhaps you are more of an “avocado toast” type of person. Do you indulge in a large cup of coffee with lots of sugar on your daily commute to work (post-pandemic world notwithstanding), or do you prefer a healthier option, such as green tea? How about those mortgages and college funds, perhaps it’s time to look at those numbers again? The fact is that we, psychologically speaking, either implicitly or explicitly, engage in a kind of continuous risk judgment about matters large and small all the time. So, from a psychological perspective, it is highly relevant to try to understand how the human mind understands risk, which in turn can inform us of how we can avoid cognitive pitfalls and make better choices. When we make judgments of risky decisions, does that entail intelligently calculating probabilities and cost-benefit analyses and that smarter people simply make better choices about risk? Not quite.

Within a subfield of psychology called “judgment and decision making,” with well-known pioneering researchers such as Amos Tversky and Daniel Kahneman, we study how and why humans make choices and assess risk. For a long time, especially in economics, the general view was that human decision-making was a matter of rational, cognitive processing in which alternatives were exhaustively explored and where we could accurately assess utility. This concept has now been challenged extensively in contemporary research in many fields, where several human cognitive biases and heuristics have been uncovered.

There is one specific heuristic that we are studying in our lab that could be informative. When we assess risk and try to determine whether something is risky or safe, and whether it provides some utility or not, we often use what is called the “affect heuristic.” The affect heuristic is a kind of mental shortcut, whereby people’s emotions, as opposed to more effortful and deliberate reasoning, influence decisions. Basically, people often implicitly rely on what is more colloquially referred to as “gut feelings,” even when we believe that our choices were guided by rational thought. Everything in our world that we have a concept about, such as our concept of “table,” or “cancer,” or “my friend Sarah from high school,” are tagged with certain attributes that are defining features of that concept. Our concept of "table" may include attributes such as having “four legs” and a “flat surface” on top of which you can put stuff. In addition, it is now generally acknowledged that, as a result of our individual human experience throughout development, all our concepts and memories are not only tagged with semantic attributes mentioned above, but also tagged with affect, or “gut feelings.”

Unconsciously, everything has a certain “affect”—or “goodness” or “badness”—tagged along with all the other attributes one might normally assign to any concept. Consider the word “cancer” mentioned above. Even silently reading the word will elicit a small negative affective reaction both psychologically and physiologically. On the other hand, when we think about the word “love” or of a loved one, we may covertly feel a positive sensation of warmth and calmness. Essentially, this is affect at play. We can think of affect as a vague “feeling” rather than a specific kind of concrete and, perhaps, not-so-vague emotion. Emotions come and go, but our subjective experience is always accompanied by some kind of implicit affect, irrespective of whether it is currently slightly positive or negative, calm or agitated. As it turns out, these affective states have a huge impact on how we make everyday decisions. Even highly influential CEOs of big companies concede that, sometimes, they “just go with their gut.”

It is hardly surprising that our judgments of risk and making risky choices also rely on affect. This is the hallmark of the “affect heuristic.” When we are faced with a decision involving risk, we could try to calculate the probabilities of different outcomes and try to quantify and estimate utility valuations of different options. But that involves a lot of cognitive heavy lifting. Instead, it turns out that we often consult our vague affective impressions of the concepts and scenarios under consideration. By momentarily just relying on what our gut tells us about the concept of, say, “vaccine”, our previous experiences with the flu vaccine, and our knowledge of how the vaccine eradicated polio, might generate a positive valenced affect towards the concept of vaccines. This, in turn, may bypass more effortful and time-consuming research on the efficacy and potential side-effects of vaccination. The end result is a much quicker and more efficient decision-making process that works sufficiently well most of the time.

But there is a caveat. Relying on affect does not necessarily lead to better decisions, and most of the time we are not aware of our emotions being in the driver’s seat. How do we know this?

This phenomenon was studied and linked to how we assess risk by Alhakami and Slovic in 1994, where they found that people tended to show an inverse relationship between how they rated the relative risk and utility of various activities and technologies. Basically, participants judged the level of risk and benefit of concepts such as “vaccines,” “nuclear power technology,” and “smoking” on a scale from one to five. Participants tended to rate risky technologies as being of low benefit and vice-versa. Judging the relative risk of any given activity involves a complex calculation of probabilities, a task at which we humans are notoriously bad. So, instead, we resort to using a mental shortcut whereby we are guided by the affect that accompanies the object or activity. If the object evokes a negative affect, we tend to judge it as being risky and yielding low utility, and vice versa for something that invokes a positive affect.

Is everyone equally as prone to using the affect heuristic? What happens in the brain when we use this heuristic? These are some of the questions that we have studied in our lab, together with Paul Slovic at the University of Oregon. In a series of studies, we looked at how people assess the risks and benefits of various scenarios and measured their cognitive abilities to determine if we could find any associations.

In one study, we found that the degree to which one uses the affect heuristic was related to cognitive reflection ability, even when controlling for numeracy and general intelligence. Cognitive reflection is the mechanism by which intuitive errors are identified and overridden, allowing an individual to engage in more effortful and deliberate problem-solving and decision-making. Scoring high on cognitive reflection may allow a person to identify an affective response but be able to override the gut feeling in favor of an evaluation made in a more deliberate state. It seems that more reflective individuals may be more apt at disentangling judgments of risk and utility. By contrast, less reflective individuals perhaps rely on more intuitive modes of thinking when assessing risk, thus bundling valuations of both risk and utility to a summary function of how they affectively feel in any given scenario.

This is not to say that the use of the affect heuristic is necessarily bad. However, maybe this is something to keep in mind and be aware of when we make important decisions where we want to make sure our momentary emotional state did not get too much say.