Standard approaches analyze risk via what is known as expected utility theory. Given a choice between two courses of action choose the one that maximizes expected utility (or if you will, minimizes expected disutility) where expected utility is a product of the probability of an event x its utility. That means you need two pieces of information to proceed – knowledge of the likelihood of the event (probability) and how much you value the outcome (utility).
About 15 years ago, James Hansen raised what became known as the Venus Scenario. He argued that if we carried on with business as usual qua carbon output we would reach a concentration of CO2 in the atmosphere high enough to make it possible that over 10,000 years the oceans would boil away - which is what happened on Venus. Assume that is an outcome with high disutility. What is its probability? Hansen did not say, he just said it was possible. But notice the following: assume the disutility of the end of all life is, if not infinite, just short of that. Then what the probability of it is does not matter – as long as it is non-zero, the product of the disutility of that outcome x it non-zero probability will be large enough that we ought to avoid it at all costs.
But of course we have not done that. But that is not the end of the story. Science can never rule of the possibility of risk. As such we live in a world in which many things have a non-zero probability of producing a catastrophic outcome. Nordhaus argues that (2009, 14): “In fact, there is very little that we can rule out with 100 percent probability in most areas. … Example [sic] would include biotechnology, strangelets, runaway computer systems, nuclear proliferation, rogue weeds and bugs, nanotechnology, emerging tropical diseases, alien invaders, asteroids, enslavement by advanced robots, and so on. “ As such, we face what he terms, an “infinity of infinitely bad outcomes”.
What should we do in the face of this catalogue of awful possibilities? Expected utility theory gives us no guidance. Instead the reaction of people like Nordhaus (along with Posner and Sunstein) has been to argue that we have no alternative but to ignore them. My goal is to develop a third alternative.