Professor Arden Rowell presented her paper "Miracles and Catastrophes" in Santiago, Chile at the Society for Environmental Law and Economics Annual Meeting.
The paper abstract follows:
Over the last decade, a robust interdisciplinary literature has developed to guide policymakers in managing phenomena that expose society to the possibility of extreme-downside events, such as those that might result from natural disasters, terrorism, nuclear war, asteroid strike, and extreme climate change. In many cases, such risks are treated with a form of special solicitude, such that policymakers are even encouraged to take precautions against catastrophic risk that exceed the risk’s expected value. Oddly, there is no reciprocal literature for the opposite of catastrophic risk: for phenomena that expose society to the possibility of extreme-upside events, such as might result from curing cancer or eradicating malaria, successfully colonizing other planets, ending malnutrition, developing autonomous vehicles, or implementing other transformational new technologies. Such events, which I call “miracles,” share many critical similarities with catastrophes: both involve massive impacts; invoke risk and uncertainty; generate tricky intertemporal distributions; and trigger cognitive phenomena related to each of these qualities. While miracles also differ from catastrophes in important ways—in the fact that miracles are good rather than bad; are less likely than catastrophes to invoke loss aversion; and tend to generate health, wealth, and optimism instead of their opposites—these differences are not sufficient to justify the current state of miracle neglect. Policymakers should attend to the chances of extreme-upside events, which are both possible and—at least sometimes—responsive to policy intervention.
View the full paper at SSRN.com.