risk/benefit/cost assessment – Rational-Understanding.com

The Evaluation of Resources and Risk/Benefit/Cost Assessment

The Evaluation of Resources

Resources are those things that we employ to gain satisfiers for our needs or to avoid contra-satisfiers. For example, time, physical and mental effort, money, etc. The effort involved consumes resources that we control, whether they belong to us or to others.

It is important to distinguish between resources and satisfiers. For example, although we are used to thinking of air as a resource, this is incorrect because no-one experiences, owns, or controls it. However, without it we would die. It is therefore a satisfier of an important existence need.

Like satisfiers and contra-satisfiers, resources are evaluated emotionally. Their value derives from the value of the changes to satisfiers and contra-satisfiers that their use causes. The latter, in turn, derive from the changes in our emotional state that they achieve. However, it can be extremely difficult to predict what resources will be needed and whether the desired effect will be achieved. For example, we cannot predict how long a hunting expedition will take or whether it will be successful. To add a further level of complexity, several resources may be needed to acquire a satisfier or avoid a contra-satisfier.

It may be that there is an objective and logical method of deriving the value of resources from the value of changes to satisfiers and contra-satisfiers. However, this would be a very complex process and not something that we could do in our heads, especially when under pressure to make a decision. In practice, therefore, resources are valued as follows:

Via social learning. For example, if a group of people find that dried cow dung burns, will provide warmth at night, and will cook food, then they will attach an emotional value to it. When raising children, they will educate them in that value. However, a modern person may not attach the same value, especially if he steps in it.
From experience. For example, if spending an hour carefully choosing the ingredients for a meal results in praise for one’s cooking, then the emotional value attached to that hour (a resource) derives from the emotional value of achieving that praise (a satisfier). Over time, as we make more such assessments, we will allocate an average emotional value to an hour of our time.

Inevitably, each person places a different emotional value on each resource, and these values can alter with changing circumstances and experience.

Risk/Benefit/Cost Assessment

Rarely do we control sufficient resources to fully satisfy all our needs and avoid all our contra-needs. So, we try to apply those resources that we do control to best effect. The decision on how best to apply them uses a risk/benefit/cost assessment.

All changes to a satisfier or contra-satisfier which may be caused by an act are assessed for their overall effect on our emotional state. For each satisfier or contra-satisfier this depends on four things: the priority we give to the relevant need or contra-need; the extent to which it is already impacted upon by other satisfiers and contra-satisfiers; the anticipated change to the relevant satisfier or contra-satisfier; and the likelihood that our behaviour will make that change.

The resources that we employ also have an emotional value and their use reduces our overall emotional state. When deciding to act, we take into account both our likely use of resources and the likely changes they will make to our satisfiers and contra-satisfiers. If the net change to our emotional state is positive, then this is a benefit, and, given a choice, we would normally choose the option with the highest benefit. However, if the net change is negative, this is a dis-benefit and we would not normally adopt that option.

The Value of a Gain or Loss

It is notable that people are more averse to losing a satisfier than failing to gain it. This is known as a cognitive bias and sometimes, incorrectly, regarded as irrational. The main reason for this bias is associated with the effort involved in creating and altering our schemata. Much mental effort is put into building schemata, and mental effort is, of course, a finite resource. For example, if we own a car then we also need to incorporate this fact into our schemata for shopping, travelling to work, holidays, and so on. We also need driving skills, knowledge of road traffic law, etc.

The assessment involved is relatively simple and can, therefore, be explained by mathematical analogy. If we gain a car then we gain the net benefit of a car, (a), less the effort involved in constructing the schemata that go with it, (b). The value of gaining a car is therefore (a – b). However, if we lose a car we lose the net benefit of the car, (a), and added to this is the effort involved in revising our schemata, (c). The loss is therefore (a + c) which is, of course, greater than the gain (a – b).

How Needs & Contra-Needs Motivate Us.

Variational Principles

Variational principles exist widely in the physical world. They state that a physical object, system, or event will behave in a way which minimises or, in some cases, maximises some physical quantity. The most famous of these is Fermat’s Least Time Principle which states that the path taken between two points by a ray of light is the path which takes least time.

Similar principles apply to human decision-making and behaviour. We will first attempt to satisfy the need which has greatest value to us, i.e., the need which is most pressing. Furthermore, we will attempt to satisfy it in a way which demands least use of personal resources or the resources of those close to us.

First Variational Principle – Pressing Needs

Behaviour is physical action or communication to satisfy our needs. It involves the application of resources available to us. Behaviour can be simple, i.e., directed towards a single need, or complex and directed towards several needs. In Maslow’s view, most behaviour is multi-motivated, i.e., determined by several needs rather than just one. For example, eating may satisfy one’s hunger, need for comfort, and need to socialise.

We tend to address our most pressing needs first, but priorities differ according to the individual and circumstances. The behaviours that we adopt contribute significantly to the perception of our personality, therefore.

Second Variational Principle – The Efficient Use of Resources

People aim to satisfy each personal need as efficiently as possible, i.e., in a way which yields the maximum benefit for the least expenditure of personal resources. For example, if a person walks across a park to a gate in the opposite corner he or she will do so in a straight line unless other needs are satisfied by not doing so. In this way our resources can be used to provide greatest satisfaction across all our needs.

The Role of Emotion in Decision-making

Many higher animals experience emotion and, in the human being, evolution has built on that foundation. Most psychologists now recognise that emotions are an integral part of the human reasoning and decision-making process. They are not, as so often portrayed, the enemy of reason. We may be able to make a logically or mathematically based decision in very simple circumstances, such as whether to buy 4 apples for a pound at one stall or five identical apples for a pound at another. However, the circumstances surrounding most decisions are far too complex for this. In such circumstances, it is emotions that motivate our behaviour. They are used to “tot up” the effects of satisfiers and contra-satisfiers, i.e., those things which cause our needs to be satisfied or which cause harms we wish to avoid.

We experience several basic emotions, and they fall into two classes. Those associated with satisfiers are regarded as positive and those associated with contra-satisfiers are regarded as negative. Our decisions aim to improve our overall emotional state by increasing the former and reducing the latter. Note that it is satisfiers and contra-satisfiers, i.e., external causes, that are evaluated rather than our internal needs and contra-needs. So, for example, the presence of a contra-satisfier such as a disease, and the absence of a satisfier such as food will both contribute to a negative emotional state.

Our overall emotional state depends on whether the status of each satisfier or contra-satisfier is: absent; latent; precarious; or entrenched. Here, “latent” means capable of manifesting, for example when a satisfier is promised, or a contra-satisfier threatened. “Precarious” means present but insecure. “Entrenched” means present, solidly established, and unchangeable.

Emotions are experienced on a scale from mild or non-existent to strong or overwhelming, depending on the priority of the need or contra-need and the status of the satisfier or contra-satisfier. Most of the time our emotions are low key, for example a mild feeling of discontent, and we are capable of consciously verifying our decisions and making rational choices. These lower key emotions are used to “tot up” the predicted effects of our decisions before they are implemented. For example, if we decide to behave in an anti-social manner, then we are likely to predict social censure, which is of course a contra-satisfier. This will contribute to feelings of anxiety which may cause us to alter our decision.

However, when emotions are very strong or overwhelming, we experience stress. Hormones are released which prepare our bodies for swift action in the face of an immediate risk or opportunity and we respond almost entirely unconsciously. This is, of course, an inherited survival mechanism which, on average, enables us to survive and prosper when there is no time for the conscious verification of our decisions. It does, however, carry with it a strong risk of error.

When making more considered decisions about our behaviour we carry out a form of risk/benefit/cost assessment. In this context, “risk” means the likelihood that our behaviour will result in the anticipated benefits and/or dis-benefits. “Cost” is the value that we place on the resources used.

The “benefits” of any behaviour are reductions in negative emotions, such as fear and grief, and increases in positive emotions, such as happiness. These benefits are due to increases in the status of satisfiers and decreases in the status of contra-satisfiers. For example, a benefit results when access to food increases or when a risk of disease decreases.

Dis-benefits, on the other hand, are increases in negative emotions and decreases in positive emotions. They are due to decreases in the status of a satisfier or increases in the status of a contra-satisfier.

Benefits and dis-benefits can of course, cancel one another out and, depending on their relative magnitude, may yield a nett benefit, no overall benefit/dis-benefit, or a nett dis-benefit. The magnitude of benefits and dis-benefits are, in turn, determined by several factors related to needs and contra-needs which will be described in a future article.