In the debate between Paul Midford and Jun Okumura on the likelihood of a restart of nukes this summer, I'm with Paul. I believe much fewer than 10 nukes will be reopened this summer; it is possible that none will be re-started. I think the level of distrust of the government is so high that it will take quite a bit of time--and perhaps a couple summers of shortages--before people buy Jun's reasonable-sounding solution because they won't believe that it's a truly independent agency and won't trust the enhanced safety measures.

I'm reading a terrific book by a psychologist who won the Nobel Prize in Economics and helped found the school of Behavioral Economics. It's called "Thinking Fast and Slow" and the author is Daniel Kahneman. It's written for the intelligent layman. His insights shed a lot of light on the Fukushima disaster and the reaction to it.

Kahneman's simple insight--which corrects the strict rationality assumption of mainstream economics--is that, in certain circumstances, people (including
experts) systematically make irrational errors and show consistent biases. Losses like are felt far more intensely than equal gains, e.g. a $100 loss in the stock market influences follow-up behavior far more than a $100 gain. Fukushima was a huge loss.

Here's one experiment that shows the irrational bias.
For certain kinds of cancer surgery produces better long-term survival rates than radiation, but the short-term risks are higher. So, in one experiment, doctors were divided into two groups and asked to answer yes or no to one of two scenarios:
a) The one-month survival rate is 90%.
b) The one-month mortality rate is10%.
Of the doctors asked question A, 84% of doctors said yes. Of those asked question B, just 50% said yes.
But the two results are exactly the same! Just one is posed in terms of survival and the other in terms of death. And these are doctors, the experts on whom we to make a rational suggestion about our best option.
That's pretty scary.

So, the negative effect of Fukushima is felt very intensely. Added to this is what Kahneman calls the "cascade effect." When an event is constantly in the news, people feel is far more intensely than they otherwise would.

That brings us to people's responses to the notion of re-opening the nuclear plants. One of the first things we are taught in economics is that when you are asked whether X is good or bad, the proper response
is: compared to what?

If you ask people how they feel about nuclear power in the wake of Fukushima or about reopening the nuke plants--especially in light of articles about the deceptions of the utilities and government agencies--of course the feelings will be highly negative. But now
ask:
compared to what?

The World Health Organization estimate of the number of people who died from Chernobyl is about 6,000 (though it could be much higher); I don't know if there was any detectable increase in deaths from Three Mile Island, and we'll have to see about Fukushima. On the other hand, 4,000 coal miners die every single year in mining accidents in China (about 40 die in a typical year in the US). Across the world, 2-4 million people die each year from air pollution mainly caused by various forms of energy, from coal to cow dung to oil. 99% of these deaths are in non-OECD countries where anti-pollution measures are regarded as too costly. That leaves perhaps 10-20,000 or more deaths in the rich countries (I'm trying to pin down numbers now), not to mention non-lethal illnesses. So, as bad as nuclear power may be, is it worse than other forms of energy that are currently available? But these pollution deaths are not making headlines; Fukushima is.

Of course, there is the economic damage and the possible rendering of an entire region of Japan uninhabitable. Clearly, the real cost of nuclear power than conventional estimates suggest. There is a reason that private firms won't insure nuclear plants without big gov't subsidies.

People's emotions in Japan may change depending on how much they have to sacrifice due to the nuke shutdown and how directly those sacrifices are tied to the nuke shutdown. If the linkage is not manifest, the impact will be less.

There is another lesson from Kahneman. Since Egyptian times, people have traced the high water mark from floods and built seawalls, etc. on the presumption that no flood will be higher than the highest ever recorded.

The fact that they've repeatedly been wrong has not changed the pattern.
Just as the TEPCO people did for the tsunamis that they counted going back centuries (but not enough centuries).

Richard Katz
The Oriental Economist Report