These characteristics include accessibility, speed, transparency, and cost effectiveness. An eye-opening look at the ways we misjudge risk every day and a guide to making better decisions with our money, health, and personal livesIn applied settings, such as aviation, medicine, and finance, individuals make decisions under various degrees of uncertainty, that is, when not all risks are known or can be calculated. In such situations, decisions can be made using fast-and-frugal heuristics.
“The major cause is the unbelievable failure of medical schools to provide efficient training in risk literacy,” he writes.Gigerenzer, who has taught around 1,000 established doctors on continuing education courses, estimates that 80 per cent “do not understand what a positive test means, even in their own specialities. But, on the basis of his work with doctors in particular, Gigerenzer believes that the professionals’ own ignorance is as much to blame. Reviewed: January 23rd 2014Published: May 31st 2014.Some of this misleading comes from deliberate manipulation.
Gigerenzer, who spent several years as a psychology professor at the University of Chicago, illustrates this by citing an estimate that American doctors order a million unnecessary CT (computed tomography) tests on children every year – causing a substantial number of cancer cases because young tissues are vulnerable to the significant X-ray doses involved.Doctors favour less medical intervention on themselves and their immediate family than on unrelated patients. They order an excessive number of tests, drugs or operations, even at the risk of hurting the patient, for fear that he or she might otherwise sue if a disease is overlooked. On the whole, the effect is to exaggerate the probability that an individual is suffering from a particular disease following a diagnostic test.This misunderstanding exacerbates the tendency of doctors, particularly in the US, to practise “defensive medicine”.
It is far from being a textbook on risk analysis but will help readers to make better decisions when uncertainty clouds the evidence. Gigerenzer proposes that more abstract disciplines, such as algebra and geometry, could yield some classroom time to statistical thinking, “the most useful branch of mathematics for life”.Although English is not Gigerenzer’s first language, he has written Risk Savvy in an engaging style with welcome touches of humour. The Risk Savvy investment advice is to hold a simple, diversified portfolio with minimum outside involvement.The long-term solution lies in education. But what he does present amounts to a serious indictment of financial professionals who fail to understand or communicate the risks and rewards of their products.
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