Extinction as a Market Failure
This is an old article, restored from a previous blog.
Hold your breath for a second, and think about your chances of winning the big one in the sweepstakes. About one in a million, right? That’s not very much, but hey, I can spare a few bucks for a one in a million chance of winning the good life.
Now, consider the same one in a million chance in a different scenario.
Based on the frequency of previous asteroid impacts, the probability of an extinction-level (≥10 km) asteroid impact in this century is around one in 1 million.
Congratulations! You just won the lottery!
WTF??!!! That’s quite significantly above zero in this context. But then, what can you do? Apart from waxing philosophical?
a system to deflect large asteroids would cost between $1 and 20 billion to develop
Oh, that’s actually quite cheap. $20 billion is the kind of money authorities routinely spend on saving a single bank lately.
In terms of cost per life-year saved by avoiding extinction of the human species, $20 billion is about $2.50 per life-year. Pocket change.
So, why aren’t we building an asteroid deflection system? Difficulties comprehending extremely large impacts and extremely small chances play their part. As do the short time horizons of politicians. Finally: the invisible hand is absent here.
extinction risks are market failures where an individual enjoys no perceptible benefit from his or her investment in risk reduction
Let’s engrave that quote in a big black stone for future aliens visiting Earth.