It is well known that people can perceive risk in a different (sometimes very different) manner from risk as statistically measured from empirical evidence. In certain places, there is a tendency to belittle perceived risk and to deny it any right to stand in the place of objective (sometimes called actual) measures of risk. This position has prevailed among the scholars long enough,14 but has never gone completely
unchallenged. Today, as a matter of fact, we are witnessing a revival of the opposite position. Reliance on perceived risk is basically founded on the observation that, in an utilitarian society, subjective assessment of risk cannot be outright dismissed as ‘wrong’: the public will assume responsibility for judgement which, however faulty, can bring utility to them.
At a different level, the conception of risk itself can be considered so composite and problematic, that a ‘cold’ computing of statistical probability may look inadequate to the task of transmitting the attitudes of individual toward a dangerous prospect. Recently, some researchers have gone so far as to maintain that the subjective perception of risk can be held superior to the objective one as a guide to public decisions.15
It can be held that the vision according to which objective reality ought not to be accorded a relevant place in collective decision making, is not necessarily ‘progressive’. On the
contrary, this vision has been attacked as inherently traditionalist and conservative.
Is the dichotomy between objective and perceived risk well founded? In a sense, all measures of risk must necessarily use a human medium, so that all they can be labelled as subjective (and are, in that sense, perceived). Still, it cannot be denied that there are such things as scientific methods by which risks are evaluated on the basis of data, and that such methods can at times contradict the results of strictly subjective evaluations. While they do not seem to disagree on the methods of collecting the evidence required for the actual decision, supporters of the ‘perceptionist’ school and of the ‘objectivist’ one subscribe to different definitions of risk. The difference is that perceptionists accept a definition which encompasses aspects which are missing from that of the objectivists. In principle, all aspects relevant to the subjective assessment of risk can be embodied by the former.
The appeal to self-interest implicit in the Utilitarian roots of the subjective approach is strong. The right to assess one’s own preferences is certainly an overwhelming argument vis- à-vis the claim of the technocrats to regulate other people’s private lives.16Moreover, technocrats can and do go wrong, or
are simply unable to produce consistent responses, as testified
ad abundantiam by Jones-Lee.17Therefore, people should not
be foreclosed from participation in risk assessment by a deterministic vision of the authority of science (and scientists).
On the other hand, there are additional arguments, which can be employed in different directions and with ambiguous results. For instance, reliance upon perceived risk can produce regulatory ‘mistakes’ (like, e.g., the over- or under- regulation of certain phenomena). The overall result can be counterproductive – and possibly adverse to the interests of the majority. On a different level, perceived risk differs from objective risk in that it lends itself more easily to manipulation. The danger implied by a given transport mode can be magnified beyond the results of objective tests and evidences. (Still, the uneasiness produced by what is perceived by many as an ‘avoidable’ danger is an evil in itself, which – if possible and/or convenient in a truly democratic process-warrants consideration). According to many, then, the perceptionist position can be employed in a ‘conservative’ direction. At worst, perception could even be invoked to support entrenched (but inherently wrong) ideas, or even prejudices (e.g., that AIDS can be transmitted through casual contact, or that interurban highways are more dangerous than intra-urban ones). On the other hand, several political scientists have found a liberalizing effect of science and scientific truth. Science can indeed be used to limit the power of elites to induce actions guided by unwarranted or self-serving purposes, by holding the elites accountable to a sort of external reference. And yet, in a real democracy. unquestioning deference to the conclusions of scientists is also potentially counterproductive. The opinions of ‘official’ scientists, if not the result of science itself, can sometimes serve vested interests and be manipulated by authoritarian
governors much like public perception. The ultimate goal in a society which, while sympathetic to the Utilitarian view, is willing to avoid the most unpalatable implications of the latter, should then be that of striking a balance between subjectivism and democratic control.
NO T E S
1 Ponti, M., (2002) Railway Liberalization in a “Public Choice”
Perspective. In this issue.
2Ponti, M. (2002), op. cit.
3 Among the most important contributions produced by the revived
interest in the idea of unlimited rationality, see Kahneman, D., Slovic, P. and Tversky, A. (Eds.) (1982) Judgment under Uncertainty: Heuristics and Biases. Harvard, Cambridge University Press; Hogarth, R.M. Reder, M.W. (Eds.) (1986) Rational Choice. The Contrast Between Economics and Psychology. Chicago, The University of Chicago Press; Thaler, R.H. (1991) Quasi Rational Economics. New York, Russell Sage Foundations. The classical reference for the early criticisms of the unlimited rationality hypothesis is the work by Herbert Simon (see, e.g., Models of Man. New York, Wiley, 1957).
4Douglas M. (1990) Risk as a Forensic Resource. Daedalus, Vol. 118,
p. 13.
5 Cognitive dissonance was known to marketing scholars and
practitioners since the ‘50’s, when Festinger first introduced this notion to the economists’ audience. The more recent literature, however, has somewhat enlarged our understanding of the phenomenon. See, a.o., Festinger, L. (1957) A Theory of Cognitive Dissonance. Stanford, Stanford University Press; Akerlof, G. and Dickens, W. (1982) The Economic Consequences of Cognitive Dissonance. The American Economic Review, Vol. 72, p. 307.
6It is clear that, in dealing with problems like this, many people perform
a subtle substitution of the idea of the accident per se for the original idea of fatal, or invalidating, accident, which was the core of the problem.
7Kunreuther, H. (1976) Limited Knowledge and Insurance Protection.
In Public Policy, Vol. 24, p. 227, has shown that the most important factor in influencing farmers’ propensity to insure themselves against the damages from river floods is the fact of having heard about damages borne by other farmers.
8The evaluation of the level of risk implied by any given event consists
of two elements: the estimate of the likelihood of the event itself, and the assessment of the level of risk. Many people, though, seem to find it difficult to distinguish between them. Thus, the likelihood of a certain prospect (being bitten by a bee during a walk in the countryside) may be high, and the risk of dying because of it may be as low as zero, still many of us might hold that the risk of dying because of a bee’s sting is not insignificant. See, for a survey of the literature, Baron, J. (1998) Thinking and Deciding. Cambridge University Press, ch. 12.
9Here, the problem is twofold. On one hand, this kind of comparison is
misleading, as the quantity of tar does not lie in any obvious relationship with the level of risk attached to it. On the other hand, and because of the first mistake, it cannot provide guidance to correct behaviour.
10To many people, as a matter of fact, even greatly statistically different
measures may look only marginally so. One reason is obviously a cognitive one (the difference between 10-3 and 10-4 may not look very unlike that between 10-4 and 10-5), and it seems that many scientists, too, are liable to make these sort of mistakes! Another reason may be that such differences do not reflect the risk that most actual people are faced with.
11 Kip-Viscusi W. (1992) Fatal Tradeoffs. Public and Private
Responsibilities for Risk. Oxford University Press, New York., New York. There is an obvious affinity between this behaviour and other phenomena, like the so called lulling effect, or the more familiar moral hazard.
12Hammond J.P. (1982) Utilitarianism, Uncertainty and Information. In
Sen A.K. Williams, B. (Eds.), Utilitarianism and Beyond. Cambridge University Press, Cambridge.
13 For instance, the presentation of alternatives should be done in
F A B I O N U T I
meaningful and well understood alternatives (e.g., the answer to the question “is it safer to fly or to take the train ?” may obviously depend on the route and the time of the year, and even on length and characteristics of the trips to and from the terminal).
14Starr C. (1980) Introductory Remarks. In Schwing R., Albers W.
(Eds.) Societal Risk Assessment: How Safe is Safe Enough? Plenum Press, New York.
15Reyner S., Cantor R. (1987) How Fair is Safe Enough? The Cultural
Approach to Societal Technology Choice. Risk Analysis, Vol.7, p. 3; Gillette, C.P., Krier J.P. (2002) Risk, Courts, and Agencies. In Law and the Environment. A Multidisciplinary Reader. Percival R.V., Alevizatos D. (Eds.), Temple University Press, Philadelphia; Thompson P.B. (1990) Risk Objectivism and Risk Subjectivism: When Are Risks Real ? Risk, Vol. 3, p. 22.
16In this vein, for instance, it has been contended that the real issue is
not risk, “but power; the power to impose risks on the many for the benefit of the few”, Perrow C. (1984) Normal Accidents: Living With High Risk Technologies. Basic Books, New York .
17Jones-Lee M.W. (1989) The Economics of Safety and Physical Risk.
Basil Blackwell, Oxford.
BI B L I O G R A P H I C RE F E R E N C E S
AKERLOF, G. and DICKENS, W. (1982) The Economic Consequences of Cognitive Dissonance. The American Economics Review, Vol. 72, p.307.
BARON, J. (1998) Thinking and Deciding. Cambridge University Press, ch. 12.
DOUGLAS, M. (1990) Risk as a Forensic Resource. Daedalus, Vol. 118, p. 13.
FESTINGER, L. (1957) A Theory of Cognitite Dissonance. Stanford, Stanford University Press.
GILLETTE, C.P. and KRIER, J.P. (2002) Risk, Courts, and Agencies. In Law and the Environment. A Multidisciplinary Reader. Percival, R.V. and Alevizatos, D. (Eds.), Temple University Press, Philadelphia. HAMMOND, J.P. (1982) Utilitarianism, Uncertainty and Information. In Utilitarianism and Beyond. Sen, A.K. and Williams, B. (Eds.), Cambridge University Press, Cambridge.
HOGARTH, R.M. and REDER, M.W. (Eds.) (1986) Rational Choice. The Contrast Between Economics and Psychology. Chicago, The University of Chicago Press.
JONES-LEE, M.W. (1989) The Economics of Safety and Physical Risk. Basil Blackwell, Oxford.
KAHNEMAN, D., SLOVIC, P. and TVERSKY, A. (Eds.) (1982) Judgment under Uncertainty: Heuristics and Biases. Harvard, Cambridge University Press.
KI P-VI S C U S I, W. (1992) Fatal Tradeoffs. Public and Private Responsibilities for Risk. Oxford University Press , New York.
KUNREUTHER, H. (1976) Limited Knowledge and Insurance Protection. In Public Policy, Vol. 24, p. 227.
PE R R O W, C. (1984) Normal Accidents: Living With High Risk Technologies. Basic Books, New York .
PONTI, M. (2002) Railway Liberalization in a “Public Choice” Perspective. In this volume.
REYNER, S. and CANTOR, R. (1987) How Fair is Safe Enough? The Cultural Approach to Societal Technology Choice. Risk Analysis, Vol.7, p. 3.
STARR, C. (1980) Introductory Remarks. In Societal Risk Assessment: How Safe is Safe Enough? Schwing, R. and Albers, W. (Eds.), Plenum Press, New York.
THALER, R.H. (1991) Quasi Rational Economics. New York, Russell Sage Foundations.
THOMPSON, P.B. (1990) Risk Objectivism and Risk Subjectivism: When Are Risks Real ? Risk, Vol. 3, p. 22.
1. Introduction
The privatisation of the rail system in Britain can be seen as the third, and most controversial, stage of a process which began with the Transport Act of 1980 and deregulation of express coach services in that year. This was followed by the deregulation of local bus services under the Transport Act of 1985. The rail
privatisation has been the most complex and extensive, due in part to the different nature of the industry, involving infrastructure as well as service operations, and freight as well as passenger. The government’s own policy was often unclear in the early stages, as Shaw1has shown. The structure of the
industry remains a subject for intense debate, especially the role of Railtrack2(monopoly provider of infrastructure).
This paper follows an earlier piece of work reported to the 1998 World Conference on Transport Research3which examined the
net financial impacts of rail privatisation, based on the known sale value of the privatised businesses, and the commitments made in the first round of passenger franchises (all of which, with one minor exception, were for seven years or more). It is now opportune to examine the outcome after the first five full years of franchised operation, in which much more is known of trends in ridership and financial performance.
As in the case of the express coach and local bus industries it is important to distinguish as far as possible the external factors which would affect performance of the industry apart from privatisation and deregulation per se. For example, in the case of local buses an underlying negative trend might be expected due to rising car ownership, the question being the extent to which ridership losses (in aggregate) were greater or lower than might be expected from this and other related causes. Conversely, in the case of the rail industry since privatisation the main external factors have been positive, notably growth in GDP and employment in central London. It is also important to distinguish privatisation and deregulation effects separately. In the case of rail, the industry is wholly privatised but if anything is more regulated than before, notably in terms of service levels and fare controls.