University of Chicago Law School Chicago Unbound Journal Articles Faculty Scholarship 2006 Efficient Responseso t Catastrophic Risk Richard A. Posner Follow this and additional works at: https://chicagounbound.uchicago.edu/journal_articles Part of the Law Commons Recommended Citation Richard A. Posner, "Efficient Responseso t Catastrophic Risk," 6 Chicago Journal of International Law 511 (2006). This Article is brought to you for free and open access by the Faculty Scholarship at Chicago Unbound. It has been accepted for inclusion in Journal Articles by an authorized administrator of Chicago Unbound. For more information, please contact [email protected]. Efficient Responses to Catastrophic Risk Richard A. Posner* The Indian Ocean tsunami of December 2004 has focused attention on a type of disaster to which policymakers pay too little attention-a disaster that has a very low or unknown probability of occurring but that if it does occur creates enormous losses. Great as the death toll, physical and emotional suffering of survivors, and property damage caused by the tsunami were, even greater losses could be inflicted by other disasters of low (but not negligible) or unknown probability. The asteroid that exploded above Siberia in 1908 with the force of a hydrogen bomb might have killed millions of people had it exploded above a major city. Yet that asteroid was only about two hundred feet in diameter, and a much larger one (among the thousands of dangerously large asteroids in orbits that intersect the earth's orbit) could strike the earth and cause the total extinction of the human race through a combination of shock waves, fire, tsunamis, and blockage of sunlight wherever it struck. Other catastrophic risks, besides earthquakes such as the one that caused the recent tsunami, include natural epidemics (the 1918-1919 Spanish influenza epidemic killed between twenty and forty million people), nuclear or biological attacks by terrorists, certain types of lab accidents (including one discussed later in this Article), and abrupt global warming. The probability of catastrophes resulting, whether or not intentionally, from human activity appears to be increasing because of the rapidity and direction of technological advances. It is natural to suppose that the prediction, assessment, prevention, and mitigation of catastrophes is the province of science, but in this Article, which is based on my book Catastrophe: Risk and Response, I will argue that economic Richard A. Posner is a judge on the United States Seventh Circuit Court of Appeals, a senior lecturer at the University of Chicago law school, and the author of Catastrophe: Risk and Response (Oxford 2004). This Article is adapted from the text of a talk that was delivered at the AEI- Brookings Joint Center on Regulation on March 1, 2005. The author thanks Meghan Maloney for her excellent research assistance. HeinOnline -- 6 Chi. J. Int'l L. 511 2005-2006 ChicagoJournal of InternationalLaw analysis has an important role to play, as well.' Able scientists can commit analytical errors when discussing policy that economists would easily avoid. Thus Barry Bloom, dean of the Harvard School of Public Health, has criticized the editors of leading scientific journals for having taken the position that "an editor may conclude that the potential harm of publication outweighs the potential societal benefits."' (The specific reference is to publications from which terrorists could learn how to create lethal biological weapons.) Bloom calls this "a chilling example of the impact of terrorism on the freedom of inquiry and dissemination of knowledge that today challenges every research university."3 He appears to believe that freedom of scientific research should enjoy absolute priority over every other social value. Such a belief comes naturally to people who derive career advantages from being able to engage in a particular activity without hindrance, but this belief arbitrarily refuses to weigh costs and so consider the need to make tradeoffs. Bloom is particularly incensed at limitations on allowing foreigners to study science in American universities. Under the rubric of "Advancing Openness," he advocates changes in existing regulations to enable any foreigner who obtains a visa for studying science in the United States to pursue any area of scientific research, however sensitive and whatever the student's likely motive.4 Bloom's concern is understandable in terms of professional self-interest. American universities, and especially their graduate programs, are heavily dependent on foreigners. According to Bloom, 24 percent of the graduate students at Harvard are foreign.' But professional self-interest is not a sure guide to sound public policy. I will begin my analysis of the catastrophic risk problem with the recent tsunami. Suppose that a tsunami as destructive as the one that struck the Indian Ocean occurs, on average, once a century and kills 250,000 people. That is an I For a general discussion, see Richard A. Posner, Catastrophe: Risk and Response 139-98 (Oxford 2004). 21 Barry R. Bloom, Bioterroism and the Universiy: The Threats to Securi y-and to Openness, Harvard Magazine 48, 51 (Nov-Dec 2003), quoting an uncited agreement among editors of thirty-two major biological science journals. 3 Id. 4 Id at 52 ("It is my view that anyone here for training, from any country, who is bright enough and promising enough to be admitted... and who is cleared by the government agency that has been set to screen applicants.., ought to be able to pursue any area of study and research under faculty supervision in the university."). I take it that by "cleared by the government agency that has been set to screen applicants" Bloom simply means that the applicant has received a visa permitting him or her to study science, as distinct from having received a security clearance. Obviously the government cannot conduct a full background investigation of every foreign student who wants to study science in the United States. 5 Id. Vol. 6 No. 2 HeinOnline -- 6 Chi. J. Int'l L. 512 2005-2006 Effident Rerponses to CatastrophicRisk Posner average of twenty-five hundred deaths per year. Even without attempting a sophisticated estimate of the value of life to the people exposed to the risk, one can say with some confidence that if an annual death toll of twenty-five hundred could be substantially reduced at a moderate cost, the investment would be worthwhile. A combination of educating the residents of low-lying coastal areas about the warning signs of a tsunami (tremors and a sudden recession in the ocean); establishing a warning system involving emergency broadcasts, telephoned warnings, and air raid-type sirens; and improving emergency response systems would have saved many of the people killed by the Indian Ocean tsunami, probably at a total cost below any reasonable estimate of the average losses that can be expected from tsunamis. Relocating people away from coasts would be even more efficacious, but except in the most vulnerable areas or in areas in which residential or commercial uses have only marginal value, the costs would probably exceed the benefits. This is because the annual costs of protection must be matched with annual, not total, expected costs of tsunamis. I can be a little more precise about how one might determine the costs of catastrophes. There is now a substantial economic literature inferring the value of life from the costs people are willing to incur to avoid small risks of death; if from behavior toward risk one infers that a person would pay $70 to avoid a 1 in 100,000 risk of death, his value of life would be estimated at $7 million ($70/0.00001), which is in fact the median estimate of the value of life of an American.6 The value of this transformation is simply that when we calculate a risk, we can immediately read off its cost by multiplying it by the value of life. But there is significant non-linearity to be considered at both ends of the risk spectrum. At the high end, ask yourself what you would demand to play one round of Russian roulette; the answer is probably a good deal more than 1/6 of $7 million. At the other, low-probability end of the risk spectrum, there may be a tendency to write the cost of the risk down to or near zero. In other words, the studies from which the $7 million figure is derived may not be robust with respect to risks of death either much larger, or much smaller, than the 1 in 10,000 to 1 in 100,000 range of most of the studies-and we do not know what the risk of death from a tsunami was to the people who were killed, though it was probably toward the low end of the range. Moreover, because value of life is positively correlated with income, the $7 million figure cannot be used to estimate the value of life of the people killed by 6 W. Kip Viscusi and Joseph E. Aldy, The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World, 27 J Risk & Uncertainty 5, 63 (2003). 7 Id at 40. Winter 2006 HeinOnline -- 6 Chi. J. Int'l L. 513 2005-2006 ChicagoJournal of InternafionalLaw the Indian Ocean tsunami-or at least most of them.8 Additional complications arise from the fact that the deaths were only a part of the cost inflicted by the disaster. The injuries, the suffering, and the property damage that resulted from the tsunami have to be estimated in conjunction with the efficacy and expense of precautionary measures that would have been feasible. In addition, the risks of smaller but still destructive tsunamis that such measures might protect against must be factored in; nor am I confident about my "once a century" risk estimate.