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Averting Catastrophe: Decision Theory for COVID-19, Climate Change, and Potential Disasters of All Kinds, Cass R. Sunstein

Reviewed by Timothy W. Kneeland

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Cass R. Sunstein once served as administrator of the Office of Information and Regulatory Affairs, which is charged with oversight of federal regulation in areas such as climate change. In Averting Catastrophe, Sunstein tells readers that the most difficult challenge he faced in that role was helping to develop an estimate of the “social cost of carbon” (p. 1), a task that involved working with a large number of unknowns. That experience inspired him to write this book, which seeks to connect decision theory to regulatory policymaking. The book focuses on policies aimed at dealing with catastrophes, “understood as extreme downsides, making human life immeasurably worse” (p. 2); these rare but dire events include pandemics, climate change, and other potential disasters for which we lack the information necessary to develop a straightforward cost-benefit analysis.

Sunstein has found that in dealing with possible catastrophic outcomes, absent essential information, many regulators opt to use the maximum principle and pursue policies that eliminate the worst of the worst-case scenarios. For example, in the face of global warming, regulators might seek to eradicate the worst-case scenario by imposing the most stringent regulation on greenhouse gases. While such policies eliminate the potential for catastrophic global warming, which may or may not occur, they may generate new social problems, such as increasing poverty and economic decline. Furthermore, choosing this option may thwart the development of interventions to alleviate or eliminate the threat. Sunstein points out that the maximum principle neglects to include any potential for “miracles,” unlikely events with extreme upsides that make human life immeasurably better (p. 2). Thus, Sunstein warns that adopting the maximum principle in regulatory decision-making is usually a mistake. Instead, he argues for applying a general cost-benefit analysis to any decision that regulators face, a belief reflected in the Office of Management and Budget's Circular A-4, which he calls “a kind of Bible for federal regulatory analysis in the United States” (p. 24).

For nonroutine and novel circumstances such as pandemics, climate change, and emerging technologies, Sunstein suggests that applying decision theory can help regulators make more informed decisions that avoid the maximum principle. He demonstrates this by offering a series of monetized forced-choice scenarios involving significant unknown outcomes to highlight decision-making fallacies. These scenarios expose the problems of being overly precautious and risk averse and of acting as if all outcomes of a situation are equally likely and claiming that consequences are irreversible when they may, with some additional costs, be reversible. Sunstein is careful to avoid rejecting the maximum principle altogether. Instead, he offers three conditions in which it is reasonable to apply the maximum principle: when the cost-benefit analysis shows only a modest cost of implementation, when there is a high expectation that a catastrophe is imminent without regulation, and when it is not possible to logically reduce the uncertainty of a given outcome.

Averting Catastrophe is a valuable addition to administrative thinking. Policymakers and academics alike will find it helpful in their decision-making. Unfortunately, the book has its flaws. Despite the catchy title, there is no systemic study of COVID-19, climate change, or disasters, which are mentioned generically in a few paragraphs scattered throughout the text. If any or all references to these catastrophes were removed, it would have no impact on the book whatsoever. Even though Sunstein has a well-earned reputation for excellent writing, this book is unfortunately dense and not recommended for an introductory reader because it lacks explanation of his concepts

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