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Risk Savvy: How to Make Good Decisions Hardcover – April 17, 2014


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Product Details

  • Hardcover: 336 pages
  • Publisher: Viking Adult (April 17, 2014)
  • Language: English
  • ISBN-10: 0670025658
  • ISBN-13: 978-0670025657
  • Product Dimensions: 6.3 x 1.1 x 9.3 inches
  • Shipping Weight: 1.2 pounds (View shipping rates and policies)
  • Average Customer Review: 4.7 out of 5 stars  See all reviews (50 customer reviews)
  • Amazon Best Sellers Rank: #32,115 in Books (See Top 100 in Books)

Editorial Reviews

From Booklist

Numbers may not lie, but they are certainly often misunderstood, according to German psychologist and risk analyst Gigerenzer. We make poor decisions on an array of issues, from health-care screenings to investment decisions to planned outings, because we blindly rely on data that may be incorrectly interpreted and reported. Gigerenzer draws on psychology, sociology, and math to explain how data can start off clear and end up murky by the time it reaches its intended audience, leaving us helpless to make sound decisions about the risks involved. He notes that the risk of cancer is often misinterpreted and can lead to overzealous screenings and that Americans irrationally refused to fly after the 9/11 terrorist attacks even though the risk of being killed in an auto accident is much greater. Gigerenzer cautions readers to always look for a reference point when data is quoted and to understand the difference between relative and absolute risk. This is a highly accessible look at the importance of data and the equally great importance of clearly understanding data. --Vanessa Bush

About the Author

Gerd Gigerenzer is the author of Gut Feelings. He is currently the director of the Max Planck Institute for Human Development in Berlin, Germany, and lectures around the world on the importance of proper risk education for everyone from school-age children to prominent doctors, bankers, and politicians.

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Customer Reviews

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The book is full of examples and suggestions for various domains.
GM
Since he is covering material of interest to most of us this book is a highly recommended read, not to make your decision making easier but to make it more effective.
Fascinated explorer
Risk Savvy by Berd Gigerenzer is a very useful book about how to make good decisions under situations involving risk.
John Martin

Most Helpful Customer Reviews

29 of 30 people found the following review helpful By GM on April 18, 2014
Format: Kindle Edition Verified Purchase
Risk Savvy is a book in the behavioral economics & decision making genre. Other books in this genre include Thinking Fast and Slow, Predictably Irrational, the Signal and the Noise, works of Nassim Taleb. The book is a distillation of the author's extensive research & consulting experiences. It's very well written. It has a lot of interesting anecdotes and sound advice. It's fun and informative.

The core thesis of the book is that heuristics are powerful. Why? For one, they deal with noise (& overfit!) extremely well, which is abundant in modern life. Two, in domains where we know little, a heuristic may give you expert-level performance. The author even suggests developing correct heuristics is essentially what an expert does! So, as an individual, if you work on refining the heuristics you follow, you can make better decisions in life. The book is full of examples and suggestions for various domains.

Regarding content, the section on health care was an eye-opener for me. Comparing the medical industry with the financial industry, exposing the statistical illiteracy of doctors & incentives are truly revealing regarding what's wrong with the US health care system. Most important message? Put test results in statistical context. Don't get overtested to avoid the problem of false positives & unnecessary treatments. This book will likely change the way you seek health care.

The author's thoughts regarding teaching risk literacy to wide swathes of population are commendable. Decision making, though extremely important, is a skill few master. I highly recommend Risk Savvy and the other mentioned works to those who want to make better decisions.
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18 of 19 people found the following review helpful By John Martin on May 6, 2014
Format: Hardcover
Risk Savvy by Berd Gigerenzer is a very useful book about how to make good decisions under situations involving risk. Gigerenzer is German, but much of the book is directed at the American situation. He begins by saying that people are not stupid when it comes to assessing risk; they just lack knowledge. Being risk savvy means having such knowledge. He adds that the quest for certainty is the biggest obstacle to becoming risk savvy. Factors that affect risk are frequency, physical design (for example slot machines are designed to provide a certain, but less than 100%, payout) and degrees of belief, to what extent can you believe someone or in something.

He advocates using rules of thumb in cases of uncertainty and simple solutions whenever possible. Schools foster risk aversion by emphasizing getting the right answer over creativity and the last chapter contains some advice on how to improve education. Much of the book is focused on specific topics such as financial matters, health care and even romance. Gigerenzer has negative views on the health care industry and especially doctors who he says make defensive decisions regarding patients for fear of being sued, do not understand the health statistics they receive, and pursue profit over doing what is right. He states that a number of medical tests are worthless and even harm the patient and cites the PSA test for prostate cancer as one example. Regarding personal investments he recommends using the 1/n rule, which means dividing your investments equally over a number of different sources. In the chapter on romance he cites several interesting methods of decision-making including “maximize expected utility,” identify all the pros and cons and assign a value to each and then chose the side that gives the highest return.
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10 of 11 people found the following review helpful By Andrew on May 29, 2014
Format: Hardcover
I would give this book five stars, except that it covers a lot of the same ground that the author does in his previous books, many of which were already quite accessible to a wide audience. To some extent, it is a repackaging (and modest updating) of work that is already out there. Nevertheless, I do think this may be the best popular introduction out there, so for someone who is completely new to the work of Gigerenzer and his colleagues, it might be a five star book. It is certainly the most up to date and simplified. In essence, Gigerenzer presents an essential perspective on how to think about risk that cuts through a lot of the misconceptions out there. Make no mistake--this is not a typical pop psychology book, though it is very easy to read. It is based on rigorous and extensive research that integrates ideas from many disciplines. It is based on a mountain of empirical evidence.

The chapters on health care and diagnostic testing are especially eye opening, and I wish more people know about this stuff. To their credit, the author and his collaborators have worked hard to bring more transparent statistical information to the larger public. We all have bodies, and we will all be urged at some point (many points) in our lives to undertake tests for breast cancer, prostate cancer, and the like, and we owe it to ourselves to understand why such tests may not be in our interests. The contrarian wisdom of the statistical approach to risk is now starting to catch on, but it has met fierce resistance. This is not some crazy fad, but rather is the very basis of rigorous statistical thinking brought to the larger public.

I want to especially commend the author for pointing out that the problem is not that people are dumb.
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