Book Review: Foolproof- Why Safety Can Be Dangerous and How Danger Makes Us Safe.

I recently finished the book FoolProof by Greg Ip. The main theme, evaluating risk analysis and the effectiveness of past attempts to mitigate risk in sports, transportation, taming nature, and finance. We all have had the saying, "statistics can be made to say anything" drilled into our heads. This book nods towards this idea but airs on the side of the rosier, well intentioned, statistician, park ranger, and insurance company.

Cost-benefit analysis is a common tool used in the decision making of those who make the tough decisions. Will the cost of building on this property including potential flood damage be worth the benefit? Obviously, many people who rebuilt after Hurrican Sandy said yes... despite their higher premiums. Two points I think can be drawn about this type of analysis: 1) maybe cost-benefit analysis is not always the most effective tool, 2) too often analysis fails to correctly forecast outcomes due to emotion, misguided time preference, or incorrect assumptions surrounding correlation.

The narratives for me highlighted the overarching theme that people are not strict robotic followers of cost-benefit analysis. This interdisciplinary study of economics is increasingly seeing the light of day in academic journals and mainstream research.

Gains can not be made without a touch of risk and risk can not be eliminated as long as creativity and self-interest exist.

I highly recommend this book. The writing style is easy to understand and flows logically despite the numerous examples discussed. The book uses historical primary sources, statistical analysis, and a variety of works all of which can be found in the index.