Scope neglect

(2,000 / 20,000 / 200,000) migrating birds die each year by drowning in uncovered oil ponds, which the birds mistake for bodies of water. These deaths could be prevented by covering the oil ponds with nets. How much money would you be willing to pay to provide the needed nets?

Three groups of subjects considered three versions of the above question, asking them how high a tax increase they would accept to save 2,000, 20,000, or 200,000 birds. The response

- known as Stated Willingness-To-Pay, or SWTP - had a mean of $80 for the 2,000-bird group, $78 for 20,000 birds, and $88 for 200,000 birds. (Desvousges et. al. 1993.) This phenomenon is known as scope insensitivity or scope neglect.

Similar studies have shown that Toronto residents would pay little more to clean up all polluted lakes in Ontario than polluted lakes in a particular region of Ontario (Kahneman 1986); and that residents of four western US states would pay only 28% more to protect all 57 wilderness areas in those states than to protect a single area (McFadden and Leonard, 1995).

The most widely accepted explanation for scope neglect appeals to the affect heuristic. Kahneman et. al. (1999) write:

"The story constructed by Desvouges et. al. probably evokes for many readers a mental representation of a prototypical incident, perhaps an image of an exhausted bird, its feathers soaked in black oil, unable to escape. The hypothesis of valuation by prototype asserts that the affective value of this image will dominate expressions of the attitute to the problem -including the willingness to pay for a solution. Valuation by prototype implies extension neglect."

Two other hypotheses accounting for scope neglect include purchase of moral satisfaction (Kahneman and Knetsch, 1992) and good cause dump (Harrison 1992). Purchase of moral satisfaction suggests that people spend enough money to create a 'warm glow' in themselves, and the amount required is a property of the person's psychology, having nothing to do with birds. Good cause dump suggests that people have some amount of money they are willing to pay for "the environment", and any question about environmental goods elicits this amount.

Scope neglect has been shown to apply to human lives. Carson and Mitchell (1995) report that increasing the alleged risk associated with chlorinated drinking water from 0.004 to 2.43 annual deaths per 1,000 (a factor of 600) increased SWTP from $3.78 to $15.23 (a factor of 4). Baron and Greene (1996) found no effect from varying lives saved by a factor of ten.

Fetherstonhaugh et. al. (1997), in a paper entitled "Insensitivity to the Value of Human Life: A Study of Psychophysical Numbing", found evidence that our perception of human deaths, and valuation of human lives, obeys Weber's Law - meaning that we use a logarithmic scale. And indeed, studies of scope neglect in which the quantitative variations are huge enough to elicit any sensitivity at all, show small linear increases in Willingness-To-Pay corresponding to exponential increases in scope. Kahneman et. al. (1999) interpret this as an additive effect of scope affect and prototype affect - the prototype image elicits most of the emotion, and the scope elicits a smaller amount of emotion which is added (not multiplied) with the first amount.

Albert Szent-Gyorgyi said: "I am deeply moved if I see one man suffering and would risk my life for him. Then I talk impersonally about the possible pulverization of our big cities, with a hundred million dead. I am unable to multiply one man's suffering by a hundred million." Human emotions take place within an analog brain. The human brain cannot release enough neurotransmitters to feel emotion a thousand times as strong as the grief of one funeral. A prospective risk going from 10,000,000 deaths to 100,000,000 deaths does not multiply by ten the strength of our determination to stop it. It adds one more zero on paper for our eyes to glaze over, an effect so small that one must usually jump several orders of magnitude to detect the difference experimentally.

Continue reading here: Calibration and overconfidence

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