John F. Lobuts

Carol L. Pennewill

ABSTRACT. This paper addresses the topic of "risk-free decision-making", a term -which refers to the fact that people are acting "as if" their decisions are "risk-free". Various social theories are discussed as possible explanations for the growth of this behavior and specific examples are given. Much of the information was drawn from personal experience, current sociological and psychological literature and news events.

I. Introduction

We are living in an age where we are permitted more choices than ever before, yet confidence in our ability to make competent decisions has been undermined. Our lives have been invaded by the experts, so that even the most routine decisions cannot be made without consulting an outside source. Regardless of the choice - whether it involves diet, exercise, clothing, medical care, taxes, child-rearing, marital relations or even the number of hours we should sleep ac night - there is a certified expert that tells us what to do. The services provided by the company, "Color Me Beautiful", is a typical example. While promising co choose the perfect colors for our homes and wardrobes, this service, and others like it, suggests that we are incapable of making routine decisions. We are constantly told not to trust our own best judgment because there is always someone else more knowledgeable who should make our decisions for us. Consequently, we have begun to feel that we can no longer trust ourselves or believe in our own individual ability to make the right decisions. John A. Byrne, for example, reports that an estimated three billion dollar a year are spent by U.S. businessmen on consulting, and this amount does not include "specialized technical and engineering work".¹ Confidence in our judgment has eroded to such an extent that many people are looking for strong support groups to make their decisions for them, as seen in the popularity of pseudo-religious cults such as Jonestown and the frighteningly large following of Reverend Moon, when friends and relatives are now "kidnapping" and deprogramming their loved ones in a last ditch attempt to restore their individuality.

Not only is confidence in our ability to make the right decisions deteriorating, but the ability to accept the consequences of our decisions as well. This behavior, where people act "as if " their decisions are "risk-free" - "as if " they are not responsible for the consequences of their decisions, we have termed the "risk-free decision" phenomenon.

Risk-free decision-making is exemplified in all behavior which is morally or ethically questionable (violent or illegal acts, for example). It has to do with the erosion of our values and winning – at any cost – has replaced the ethics of honesty and integrity. It is the desire for instant gratification – regardless of the means used to obtain it.

While there have always been people in society who break the law or commit violent acts, the criteria used for making a decision have shifted from what is morally or ethically "right" to how one's actions will be "perceived". For example, it was merely because the My Lai atrocities were revealed to the public that the military felt obligated to investigate the situation. The moral responsibility of those involved was beside the point. Christopher Lasch in his book, The Culture of Narcissism, illustrates a similar example. Referring to the Watergate scandal, he writes,

Once Watergate became a full-fledged "crisis". Nixon devoted himself to convincing the nation that he could by all means prove equal to the emergency. To the end. he approached his mounting difficulties as a problem in public relations. In long conversations with his chief advisor, himself a public relations man, both Nixon and H. P. Haldeman showed an indifference to the truth that goes beyond cynicism an indifference that can be exploit only on the assumption that the concept of truth ... has lost most of its meaning.²

Society tends to reinforce this behavior in many instances. For example, this happened to Debbie Barret, who was convicted on 14 November 1981 for kidnapping, armed robbery and aggravated. She shot her husband, but was sentenced to college where she was expected to maintain a "C" average. This case and others like it reinforce the belief that People have the right to assume that their decisions are risk-free.

The purpose of this articles is to discuss various manifestations of risk-free decision-making, social theories which we believe suggest possible explanations for its occurrence and to highlight current examples of this behavior. By examining some of the obvious assumptions which most of us take for ranted, we hope, through creating an awareness of the behavior, to open the way for a solution. The authors believe in what Max Lerner refers to as the "self-correcting capacity" of the American people. That is, we are "always taking (our) moral temperature, always asking what (has) gone wrong: and why."³ so that by examining the problem, we can correct it.

II. The phenomenon as observed

The recent growth of violence in the United States reflects the risk-free decision phenomenon. Terrorism, hi-jacking, rape. robbery, assault, and murder are viewed in every home simply by turning on the radio or a television newscast. it has become nearly impossible to pick up a newspaper without reading about this behavior.

As reported in Time magazine,

Between 1960 and 1973, the U.S. homicide rate doubled, from 4.7 murders per 100, 000 people to 9.4. The rate has leveled off considerably and stands at 9.8 per 100, 000 today. (Other countries’ rates are, by the U.S. standards, amazingly low: England, 1.1 and Japan, 1.0 are typical.)⁴

This behavior is reflected not only in violence, but all actions which are morally or ethically questionable. For example, we have observed that an increasing number of people seem to be running red lights more frequently and exceeding the 55-mile-per-hour maximum speed limit. The risks involved in ignoring traffic laws are obvious, but what is the explanation for the growing number of people who are acting "as if" there are no risks?

Not only individuals, but organizations and institutions practice risk-free decision-making. M. Scott Peck gives an appropriate example of this in his book, -The Road Less Traveled. He was asked to prepare an analysis of the psychological causes of the My Lai atrocities and their subsequent cover-up. However, his

... recommendations were disapproved by the Army general staff on the basis that the research recommended could not be kept secret. "The existence of such research might open us up to further challenges. The President and the Army don't need more challenges at this time," [he] was told. Thus an analysis of the reasons for an accident that was covered up was itself covered up.⁶

III. Philosophy

It is not within the scope of this paper to provide a causal analysis of risk-free decision-making. We are primarily interested in its effects. However, there are several current books, articles, and theories which are concerned with related issues and we will discuss them briefly, as possible explanations for the risk-free decision phenomenon.

Factors such as the fast pace of modern life, the disintegration of the family and its functions, the fluctuating roles of men and women and the recent disenchantment with traditional religions and cultural values, all tend to minimize the perceived risk and personal accountability in decision-making. Alvin Toffler, author of the popular book Future Shock, attributes these factors to the "disease of change", responsible for the "malaise, mass neurosis, irrationality, and free-floating violence already apparent in contemporary live…".⁷ He predicts that the transience of modern life and the impact of technology will engender temporary, fluctuating human relationships. He quotes Courtney Tall from a paper entitle "Friendships of the Future":

Stability based on close relationships with a few people will be ineffective, due to the high mobility, wide interest range, and varying capacity for adaptation and change found among the members of a highly automated society… .⁸

This shake-up in our values and social institutions is reflected in America's current preoccupation with stress. Perhaps it is because people have begun to feel that they are unable to control the variables which affect their environment. For example, the subject of stress made the cover of Time magazine, where it was noted that

Stress is now known to be a major contributor, either directly or indirectly, to coronary heart disease, cancer, lung ailments, accidental injuries, cirrhosis of the liver and suicide - six of the leading caused of death in the U.S. ... No one really knows if there is more stress now than in the past, but many experts believe it has become more pervasive. "We live in a world of uncertainties", says Harvard's Benson, "Everything from the nuclear threat to job insecurity to the near assassination of the President to the lacing of medicines with poisons".⁹

Another reason why People are making risk-free decisions may be related to Christopher Lasch's theory that we live in a narcissistic culture. He points out that self-absorption has become so prevalence in individuals that it seems to be a reflection of society itself - that it is symptomatic of current social ills much as hysteria reflected the sexual repression which existed in Freud's time. Thus, we see the emergence of the "me" generation, an increasing number of impermanent human relationships and a growing sense of isolation between individuals. Lasch's analysis touches upon many of the same issues which Toffler discusses - problems engendered by our "progressive" age. As he succinctly illustrates:

Imprisoned in his pseudo-awareness of himself. the new Narcissus would gladly take refuge in an idee fixe, neurotic compulsion, a "magnificent obsession" - anything to get his mind off his own mind. ... contemporary man, tortured on the other hand by self-consciousness, turns to new cults and therapies not to free himself from obsessions, but to find meaning and purpose in life, to find something to live for, precisely to embrace an obsession... . The prison life of the past looks in our own time, like liberation itself.¹¹

I think the great American malady today, by the way, is not necessarily corruption, not even power corruption, although these are real problems. I think the real malady is what I call the Imperial 1 … . The Imperial 1 – gimme, gimme, grab, bra. We have become a policy of pressure groups, not just individuals, that talk in terms of the Imperial 1, with everyone thing in terms of what they can get from the public treasure, not thinking in terms of what the total bill is, or in terms of priorities or in terms of what it means for the tranquility and the cohesiveness of the nation. What that means, of course, Is that the ethic that has been emerging is that of following the line of least resistance – what everyone can get away with.¹²

Meanwhile, in this search for security, human beings have fallen into a trap of their own unwitting creation….Ultimately, in their total reliance on scientific reasoning, they forget the inspirations of philosophy, ethics and faith, which alone can give lasting harmony to their endeavors. Without such support, and with too heavy reliance on their technological expertise, people rush headlong down the paths opened by technology without questioning where they may lead. The human future thus becomes totally unpredictable.¹³

Finally, the philosophy of existentialism is another possible explanation. As a mode of being, existentialism is innate in everyone in the sense that all human beings experience subjective truth and make personal decisions based upon that truth. In terms of decision-making, it purports a purely individualistic point of view. Each of us is confronted daily with situations in which we must make a choice, it purports a purely individual point of view. Each of us is confronted daily with situations in which we must make a choice, and this choice in existentialist terms, can be based only upon the subjective truth of the individual rather than objective, empirical rationalism.

The origins of existentialism may be traced in part, to various concepts of man which have significantly influenced our society and the way we perceive ourselves. For example, this is illustrated by the perception of man as an animal, attributable to Darwin’s Origin of Species or Freud’s assertion that man is governed by subliminal sexual desires. The effect of these ideas has been to create the belief that man is a victim, either of his environment, his heritage or his own unconscious motivations. In addition, the modern age of computers, the great importance placed upon science and the faculty of reason, as well as the emphasis placed upon man's economic utility, have threatened modern man's sense of self. It is becoming increasing difficult to develop a philosophy for living in the twentieth century. Existentialism then, can be seen as a rebellion against these attitudes. There are Positive and negative aspects to existentialism. Walt Disney, for example, posited the very best of the great existentialists because he was able to utilize his creative ability in a constructive way. He gave others the opportunity to be actively involved with his characters. This can be seen in the creation of his theme parks. We believe, however, that existentialism has contributed significantly to the risk-free decision phenomenon in the sense that people have lost the ability to perceive themselves as part of a larger, unified body of individuals to which each contributes, either for the good or the detriment of the whole.

IV. Behavioral Manifestation of Risk-Free Decision-Making

Many current examples can be found of risk-free decisions-making, both at the individual and the organization level. What follows re some examples which we believe are fairly typical and reflect the prevalence of the behavior. Note that their common feature is the lack of cooperation, the lack of moral responsibility and the desire to win-at any cost.

Individual

The former President of the Bendix Corporation William Agee, attempted to procure the Martin Marietta Corporation. The money expended by Martin Marietta to save itself in this "cannibalization" process approached $98,000,000 - money that could have been invested in the company or used to provide jobs. The Bendix team, however, preferred to act without regard for the costs incurred to others, in addition to ensuring their own interests via golden parachutes". Bill Agee, for example, wrote himself a four-year contract which awarded him five million dollars. Similar awards were also written for others in Mr. Agee's top management team. This behavior reflects, in addition to the desire for power, an unwillingness to accept personal responsibility for the attempted acquisition of the Martin Marietta Corporation.

John Delorean, former Chief Executive Officer of the Pontiac Division at General Motors, resigned his position to start his own motor company. When the company faced financial disaster, Mr. Delorean was indicted with selling cocaine in order to save his dying auto company. Ironically, on the day Mr. Delorean was arrested, a financier from Columbus, Ohio had just established a financial arrangement which would have provided the money he needed. Mr. Delorean assumed a risk-free decision. His arrest forced him to take legal responsibility for his actions, but obviously he ignored the moral ramifications.¹⁴

A former college student owed the Federal Government ten thousand dollars for student financial aid. He refused to pay the money back, stating than he could not afford to, but an investigation d that he had just spent eleven thousand dollars to buy a Porsche auto. He acted "as if" the debt was no longer his responsibility - as if the consequences for his decision had no effect an others who also depend on financial aid to pay for their education.

The Agriculture Department has been promoting the sale of tobacco for years, in foreign ports as well as domestically. The Federal Government insures farmers with a fixed price on their tobacco, regardless of the market. On the other hand, the Surgeon General has proved that smoking is directly related to cancer. The question here is whether the Federal Government should be held accountable for the promotion of tobacco when it has been conclusively proven that cigarette smoking can cause lung cancer, emphysema, heart disease and other ailments. Economic utility, it seems, overrides moral responsibility and a risk-free decision is justified.

The Freedom of Information Act prevents universities from releasing any information on their students without the consent of the student. It is illegal, for example, to send parents a copy of their children's grades unless the student provides written consent or is still considered a dependent of the parents. During the Iranian crisis, however, the Immigration Department requested information from various colleges and universities on the full or part-time status of their Iranian students. The Freedom of Information Act prevented the release of the information, but doesn't it seem a bit incongruent that the Immigration Department was unaware of the Freedom of Information Act?

The Federal Reserve attempts to control inflation through interest rates and the money supply. - On the other hand, the policies of the IRS encourage people to invest in property. By doing so, they are able to save money in taxes. For example, for those in the 50th percentile tax bracket, the 15 percent interest rate on a loan becomes only 7.5 percent after taxes. The 20 percent interest rate on a loan amounts to nothing more than 10 percent after taxes. This is true and can be calculated for the 30th and 40th percentile tax bracken as well. So while the government makes apparent attempts to control inflation, it is it very difficult for the average American not to invest his money.

The misbegotten Diablo Canyon experience featured the construction of a nuclear power plan on an earthquake fault; a mix-up of blueprints that led to earthquake-proofing the wrong reactor; dozens of major errors in design; falsified records; intimidation of inspectors; senior operators who had failed their licensing examinations; and senior managers who continually assured the public that everything was fine. Through it all, the nuclear regulators insisted that Diablo Canyon was a safe facility.¹⁵

The Edison Electric Institute, representing PG & E, generated public pressure if not electricity. The institute estimated that consumers were paying $76 million for each month the Nuclear Regulator Commission (NRC) stalled in granting a license to operate the plant, in addition to risking shortages of electrical power the could result in brownouts, particularly in the summer months.¹⁶

V. Conclusions

Risk-free decision-making has become so salient in our society that it is completely unconscious. it has been incorporated for example, in many of our government institutions. The "benchmark" of these agencies , the Social Security Administration which was created in 1935 under the Roosevelt administration, was essentially designed to remove the risk of reaching old age without sufficient retirement funds by providing Americans with a guaranteed income at this time. Since then, other agencies, such as the Federal Deposit Insurance Corporation. the Federal Reserve, the Veteran Loan Guaranty Revolving Fund and the Federal Savings and Loan Insurance Corporation, are all designed to remove or reduce risks for the American people. While we are by no means condemning these institutions, it should be noted that they have had a hand in shaping our behavior. They provide many social advantages, yet should not be used as an excuse for personal selfishness for avoiding personal responsibility. Risk-free decision-making is a cultural Darwinian development. It is a phenomenon that has gradually developed over time and consequently become an acceptable mode of behavior.

VI. Recommendations

Like the adage, "'The higher you climb, the harder you fall", the more knowledge we possess, @ more potential then is for reaping - the benefits as well as the liabilities of technology. While it may be responsible for much instability in society, it is out very capacity for champ that makes America one of the most powerful countries in the world. There is no doubt that there are many constructive purposes for technology. In the words of Marilyn Ferguson,

By amplifying both the unrest and the options, a society's communications network acts much like a collective nervous system. In this sense, the technology that seemed for a time to betray us into a dehumanized future is a powerful medium for human connection.¹⁷

"If you look at overall effectiveness and efficiency, you will find that they depend on intangibles such as dedication, caring and a sense of responsibility for giving real service", says Daniel Yankelovich. "You get these intangibles only when people are motivated to work hard, to give of themselves".²⁰

The thing to remember about capitalism itself is that it came out of the Protestant Ethic… But over the centuries we have honored this ethic in only one aspect – it's acquisitive aspect. We have not honored it in other ways. We have honored it in terms of money, power, success, and security, but not in the ethics of work or helpfulness or of honesty or integrity, or of trust, which to my mind are the core of that whole traditional ethic… We must recapture that sense of calling that our ancestors had so long ago and restore some of the sacral quality, the religious quality it had in its origins.²¹

John F. Lobuts, Jr. is Associate Professor of Management Science at the George Washington University. He is Assistant Dean for Graduate Programs at the School of Government and Business Administration. He is the holder of the Certificate of appreciation, School of Health Sciences, Dept. of Navy, Bethesda, MD: "Most Innovative Paper of 1984" for ‘Risk-Free DecisionMaking’ (together with Carol Pennewill) presented to the 1984 Association for Business Simulation and Experiential Learning conference. His most important publications are ‘Further Education: A Major Movement of Our time’, Realtor, National Capital Area Realtor, Washington, DC; and ‘The Management of Training’, The Examiner, Society of Financial Examiners, Dayton, Ohio.

Carol L. Pennewill is Research Associate at the George Washington University. Her most important publication is "Do we Dare Restructure the Classroom Environment?’, Journal of Creative Behavior, 1984.

Notes

 

1 John A. Byrne, ‘Are All These Consultants Really Necessary?", Forbes, 10 October 1983, p. 136.

2 Christopher Lasch, The Culture of Narcissism (W. W. Norton & Co., Inc., New York), 1979, p. 150.

3 Max Lerner, "Business Ethics at Home and Abroad’, The Personnel Administrator, August 1977, p. 15.

4 Kurt Andersen, ‘An Eye for an Eye’, Time, 24 January 1983, p. 28.

5 Adam Smith, ‘I Just Killed My Girlfriend’, Esquire, March 1983, pp. 23-24.

6 M. Scott Peck, The Road Less Traveled (Simon & Schuster, New York), 1978, p. 53

7 Alvin Toffler, Future Shock (Bantam Books, Inc., New York), 1971, p. 11.

8 Courtney Tall, ‘Friendship of the Future’, cited by Alvin Toffler, Future Shock (Bantam Books, Inc. New York), 1971, pp. 107-108.

9 Claudia Wallis, ‘Stress: Can We Cope?’, Time, 6 June 1983.p.48.

10 David Campbell, and Jodi Kassover. ‘The Thriver’s Guide to Stress’, The Washington Post Magazine, 5 June 1983, p. 9.

11 Lasch, pp. 178-179.

12 Lerner, p. 15.

13 Aurelio Peccei. One Hundred pages for the Future (The New American Library, Inc., New York), 1982, p.6.

14 Since this paper was first presented in January 1984, John Delorean has been acquitted of all charges.

15 Susan J. Tolchin and Martin Tolchin, Dismantling America – The Rush to Deregulate (Houghton Mifflin, Boston), 1983, p. 191.

16 Ibid., p. 191.

17 Marilyn Ferguson, The Acquarian Conspiracy (Houghton Mifflin Company, Boson), 1980, pp. 128-129.

18 ‘U. S. Consumers Making a Habit of Saving Energy’, The Washington Post, 6 June 1983.

19 Michael VerMeulen, "When Employees Give Something Extra’, The Washington Post Parade, 6 November 1983, p. 11.

20 Ibid., p 11.

21 Lerner, p. 16.

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