Why people struggle to understand climate risk
The confusion inherent in a hotter world
Placed before you are two urns. Each contains 100 balls. You are given a clear description of the first urn’s contents, in which there are 50 red balls and 50 black balls. The economist running the experiment is tight-lipped about the second, saying only that there are 100 balls divided between red and black in some ratio. Then you are offered a choice. Pick a red ball from an urn and you will get a million dollars. Which urn would you like to pull from? Now try again, but select a black ball. Which urn this time?
This article appeared in the Finance & economics section of the print edition under the headline “Unknown unknowns”
From the July 15th 2023 edition
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