In a recent Foreign Policy article, “Why Hawks Win,” Nobel laureate Princeton Professor Daniel Kahneman and Harvard graduate student Jonathan Renshon argue that certain inherent human psychological traits bias us in favor of armed conflict and against negotiated compromise.
Among several tenets of social psychology, the authors cite the understanding of loss aversion imbedded in prospect theory, a formula pioneered by Prof. Kahneman and his fellow Nobel laureate, Stanford’s Amos Tversky. Prospect theory holds that human beings assign greater weight to losses than to numerically equal gains. So, on average, we will be more upset to lose ten dollars than we are happy to gain ten dollars. What’s more, we’re risk averse: We don’t like the possibility of losing and we’ll actually spend money to eliminate the risk—-often more than the estimated monetary value of the risk itself (for example we’ll pay $100 a year to insure $1000 against only a 5% chance of total loss).
Neither risk aversion nor loss aversion is a totally new insight, but the authors reconcile the two to suggest that risk may actually be preferable to certainty when the latter involves certain loss. In other words, rather than be sure to lose, say, $500, most people would prefer a scenario offering a 10% chance of losing nothing, even at the cost of a 90% chance of losing $600. Although a purely rational calculation shows the latter option to be more costly (an estimated loss of $540), loss aversion overcomes risk aversion to favor rolling the dice most of the time.
On the international political stage, Kahneman and Renshon argue, this bias causes decision makers to favor more costly military solutions over less costly diplomatic compromises. They cite the example of the Iraq “surge” as a case where a negotiated pull out would amount to an admission of loss, whereas the cost of sending in more troops, even when top generals doubt their ability to effect change, is offset by the slight chance of snatching victory from the jaws of defeat. The implication, of course, is that a purely rational calculation would put the cost of the surge well above that of a negotiated withdrawal.
Kahneman and Renshon cite two other broad social psychological theories to explain the human bias toward armed conflict, but I’ll offer just a few observations on their application of loss aversion to international relations (IR):
1. Whose decisions are we analyzing? President Bush may be “the decider” in his own idiosyncratic worldview, but it is practically an IR theory truism that domestic political forces matter. Whether they act rationally or irrationally, states (and for that matter heads of state) are not independent actors. Consequently, analyzing the US “surge” in Iraq as a binary choice by one decision maker ignores the calculus of whole subsets of the US leadership where even perfectly rational considerations might favor sending in more troops (think of those in the Republican Party who have staked electoral success on opposing Democrats’ call for withdrawal).
2. Prospect theory, like any other economic or social psychological model, really only works under “perfect” theoretical conditions, including known, quantifiable costs and benefits, known probabilities of success or failure, and independence among many closely related choices. But we have none of these in the real world. Can we be certain that the surge is 90% likely to fail? What if it has a 50/50 chance of success? What about a 90% chance of success? Do we even really have the option to negotiate with Iran and Syria that the experts say must be part of a successful withdrawal from Iraq? Given how often expert forecasts are wrong (let’s not forget the pre-war predictions), we should be exceedingly careful about assessing the costs and benefits of any geopolitical move.
3. Another feature of innate human risk aversion is that, being at least partly emotional, it can be fed by fluctuating emotional states like fear and insecurity. Thus, what might one day seem like an acceptable risk (say, jaywalking or speeding) might seem utterly unacceptable the very next (say, after seeing a jaywalker hit by a car, or a speeder pulled over), even if the actual probability of a negative outcome has not changed at all. What this means for Kahneman and Renshon’s argument is that even if we are irrationally conflict prone today, we won’t necessarily be so tomorrow. If, for example, we are stung by a dramatic and memorable defeat in Iraq, odds are we’ll harbor an irrational bias against going to war the next time round.