People are constantly faced with decisions—whether mundane, such as whether to leave the house without an umbrella, or significant, such as whether to quit a terrible job in this economy. Regardless of the magnitude of the decision, we make choices every day without certainty about the results. That is, we take risks.
This month on the blog we’ll focus on the roles risk and uncertainty play in cost-benefit analyses (CBA) of justice policies.
In the simplest terms, uncertainty involves knowledge and risk involves action. Uncertainty is a degree of doubt or some lack of confidence about what we know. In cost-benefit studies, uncertainties arise because of possible differences between a policy’s effects and the measurements or projections of those effects—and because the monetary values assigned to those effects are estimated, not iron-clad.