Acceptable Risk Essay

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Perhaps  the  topic  of acceptable  risk  never  had  a sexier  and  more  succinct  introduction than  the one Edward  Norton, playing an automobile company  executive, gave it in Fight Club:

Take  the  number   of  vehicles  in  the  field  (A), multiply it by the probable rate of failure (B), and multiply  the  result  by the  average  out  of court settlement (C). A * B * C = X. If X is less than the cost of the recall, we don’t do one.

Of  course,  this  dystopic  scene also  gets to  the heart  of the issue in another way: Acceptable  risk deals  with  mathematical  calculations  about   the value   of  life,  injury,   and   emotional  wreckage, making calculation a difficult matter  ethically, politically,   and   economically.   This   entry   will explore the history of this idea, focusing on its development, alongside statistics, into a concept of wide importance today.

Acceptable  risk  deals  not  just  with  profit  and loss but also with questions  of ethics (Is it acceptable  to  engage  in an  act  knowing  that  the  result will  be  the   death   of  another?),  politics   (Who decides who dies?), and justice (Whose risk has priority   for  remediation?). Acceptable  risk  is by its very nature  a multidisciplinary topic,  and  students  should  be prepared to confront a variety  of issues in its study. In practice,  the variety of issues adhering  to  acceptable  risk  tend  to  be skirted  by following  popular  precedents—most notably   the U.S. Food and Drug Administration’s 1973  policy ruling that  products that  cause cancer at a rate of less than  1 in 1,000,000 are “safe.” However,  setting the limit at 10-6  is arbitrary and only shifts the normative burden  to the state rather  than  answering it definitively. Even though  relatively few people will die at a level of 10-6,  some will certainly die. How  much loss of life is acceptable?  How  did we get to that  number  of acceptable  deaths?

Looking at it historically, the concept of acceptable risk only becomes possible after the invention of statistics. If one cannot  calculate the probability of  risk,  then  it  is  impossible   to  set  a  level  of probability at which  the risk becomes acceptable. Most  date  the  invention   of  modern   statistics  to 1663,   when   John   Graunt  published   the   book Natural    and   Political   Observations.   Prior   to Graunt, risk was largely considered  to be a matter of chance, for in looking at any given individual, it seemed entirely a random event whether  that  person would  get sick and die, commit  suicide, or get run down by a horse on the boulevard. Statisticians changed  the  lens  of  observation and  found  that when people were taken  as a group, rates of birth, death, and illness were quite regular  at the level of the  population. In  fact,  population was  another invention  of statisticians:  Individuals  form a population  by  dint  of  their  shared  statistical regularities.

The  term  statistics  was  itself derived  from  the same  root  word  as state and  reflects the  original usage  of  statistics  as “the  science  of  the  state.” Alongside  the many  other  changes  occurring  during the Enlightenment era, politics was changing as well. There  was a shift toward a more  proactive, statistically   driven   form   of  rule.   For   instance, instead of waiting for disease to strike and calamity to fall, there was an effort to calculate  the rates of risk   associated   with   different   milieus   and   an attempt to eliminate the riskiest aspects and spaces of  life. This  might  include  cleaning  up  standing sewage,  eliminating  overcrowding, dispersing  the poor,  and  so on. A notion  of acceptable  risk was developed  as an adjunct  to these changes  in rule. More  specifically, as a matter  of political  calculation,  it was  necessary  to  quantify  the  cost  of an action  versus its likely benefit  and  decide at what level the risks were acceptable  and further  expenditure  to reduce  them  was unacceptable. In other words,  the question  was the cost of the remediation of risk versus the benefits of the reduction in risk. Acceptable  risk, therefore, involves weighing harm  against  cost and  attempting to find a compromise that  is “acceptable.”

Adam   Smith,  along   with   David   Hume   and Adam  Ferguson,  also  played  an  important early role in the development of the notion  of acceptable risk. Although  Smith’s Wealth  of Nations is popularly  seen  as  a  treatise   defending   the  right   of the  individual  to  free  enterprise,  a  glance  at  the title should tell one that  the emphasis  is elsewhere. The  wealth  of nations  is not  the  wealth  of individuals;  it is a treatise  aimed  at the political  class detailing  the benefits  of capitalism  for the wealth of the state. At the most general level, the argument is that  Smith’s recommendations will bring greater wealth to the nation  and, thus, higher revenue and opulence  to the state.

Central  to  Smith’s argument is the  concept  of risk and,  specifically, who  is to judge the level of acceptable   risk.   The   overall   theme   of  Smith’s argument about  risk is that  the state  is in a poor position  to judge the consequences  of the actions of  individuals.  The  state  is  at  a  distant   remove from  the  individual, and  so options  that  may  be open  to the individual  because  of his or her local knowledge  or varying tolerance  for risk would  be opaque  at the level of the state.  Smith felt that  if the  decision  about  risk  was  left to  the  individual rather  than the state, it would support greater economic efficiency and innovation.

Smith did not answer many of the difficult economic,  ethical,  and  political  questions  arising from the notion  of acceptable  risk, but in relocating the locus of judgment  of risk from the state to the individual, he opened the question  as to who is the  best  judge  of  risk.  Twentieth-century economists like Milton  Friedman  and libertarian philosophers like Robert Nozick have echoed Smith’s sentiment:  They  argue  that  there  is no  universal yardstick  of acceptable  risk, and rather  than  stifle freedom and economic efficiency with governmental  regulation, individuals   should  be  allowed  to determine  their  own  levels of acceptable  risk.  Of course, others contest this assignment of the calculation of risk to the individual. For instance, Phillip Pettit takes on Smith, Friedman, and Nozick and claims that systematic forms of discrimination against  the  poor,  women,  children,  racial  minorities, and  so on place many  individuals  in a place where  they  are  coerced  into  accepting  more  risk than   they  would   prefer.  For  instance,   someone hiring  a minority  person  might  recognize  that  the individual has few options and thus abuse that individual’s lack of options by requiring extra-risky practices  or  forgoing  remediation. Thus,  because of no action on the part of the minority  person, her or his risk could be increased  relative to the whole of  the  population  because   of  the  prejudice   of society. For this reason, Pettit argues that  the state should  be  involved  in  adjudicating contracts  to prevent  such kinds of exploitation.

One further important set of questions should be acknowledged as a fundamental aspect  of acceptable risk: Namely, whose risk counts? For instance, if raising  one area  of the  town  to  protect  against flood ends in making  another relatively lower, and thus  more  prone  to risk from  floods,  whose  risks are to be judged more important? This question  is important because  it  points   out  both   that   risks from  actions  are  not  evenly  distributed and  that one person’s risk may be another person’s benefit. This tension  has only gotten  stronger  with the rise of large and powerful  corporations throughout the 20th century. Twentieth-century labor struggles can be read in part as a struggle around differences with regard to acceptable risk to life, health, the environment, the family, and retirement.

In sum,  it  is clear  to  all that  a  calculation of acceptable risk pulls one into some of the most enduring  and  complex  questions  humanity has to offer. The  statistical  questions  themselves  deserve serious attention and are difficult to answer accurately. But even beyond determining the probabilities of different  kinds of risk, value-laden philosophical  questions   are   also   necessary   to answer. How much, if any, death or injury is acceptable? Who should decide what an acceptable level of risk is? Whose  risk takes  precedence  in a society of competing  claims?


  1. Burchell, Graham, Colin Gordon, and Peter Miller, eds. The Foucault Effect: Studies in Governmentality. Chicago: The University of Chicago Press, 1991.
  2. Manuele, Fred A. “Acceptable Risk: Time for SH&E Professionals  to Adopt the Concept.” Professional Safety, v.55/5 (2010).
  3. S. Environmental Protection Agency. “Framework for Cumulative Risk Assessment.” EPA/630/P-02/001F. Washington, DC: EPA. publications/pdfs/frmwrk_cum_risk_assmnt.pdf (Accessed May 2014).

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