My second piece of holiday reading this Summer was Gigerenzer’s Risk Savvy. This is an “entertaining book” for a general readership.

I learnt quite a bit from this book, but still found it frustrating and somewhat repetitive. There are many very interesting anecdotes about risk and poor decision making under risk, as well as lots of examples of how we are manipulated by the press and corporations into acting out of fear.

However, I don’t necessarily agree with the conclusions reached.

As an example, Gigerenzer clearly shows that PSA testing for prostate cancer is the US does more harm than good compared to the UK’s approach. More people are rendered incontinent and impotent through early intervention, without any significant difference in mortality rate. A similar story is told for routine mammography. But the conclusion that Gigerenzer seems to draw from these – and similar – studies, is that “it’s better not to know”, whereas my conclusion would be “it’s better not to intervene immediately”. I can’t see why simply knowing more should be worse.

I was also frustrated by the way Gigerenzer deals with the classification of risks into “known risks”, i.e. those for which good statistical information is available, and “unknown risks”. He convincingly shows that – all too often – we deal with unknown risks as if they were known risks, resulting in poor decision making. To me this appears to be a mirror of the two ways I know of dealing with uncertainty in mathematical optimization: stochastic versus robust optimization. This is a valuable dichotomy, but I don’t think that Gigerenzer’s conclusion that, in the presence of “unknown risk”, “simple is good” and “go with your gut feeling” is well justified. I do think that more needs to be done by decision makers to factor in the computational complexity of making decisions – and the overfitting of overly complex models – into decision making methodologies, but if “simple is good” then this should be a derivable result; I would love to see some mathematically rigorous work in this area.