Resource allocation, equity and public risk: dying one at a time vs dying all together

This paper focuses on the evaluation, from an individual and societal perspective, of risk in terms of possible loss of life due to an exposure to two different types of events over a period of time. The two types are: risk of death from a catastrophic event (a sudden death of many people in a disaster at a yet unknown point in time) expected to occur during a planning period, or risk of death from another event (e.g. disease, road accident, etc) which claims fewer lives each year, but for which the expected total number of deaths over the planning period is equal to the expected number of deaths from the catastrophic event. Our analysis considers the extreme case in which these two types of events have the same probabilities of death every year and the same expected number of fatalities over the planning period. The individual's decision problem is described using a von-Neumann Morgenstern (vNM) utility function. The model suggests that the choice between these types of events depends on the value of the following variables: the probability of death over the planning period, the length of the planning period, the individual's time preference pattern, and the utility of being in different anxiety states. Stochastic extensions that may direct the public decision making process (involving aggregated preferences) are discussed. We also discuss issues of implementation.