Civil Engineering Reference
In-Depth Information
Value
Present
+
Risk seeking in the
case of losses
Future
Losses
Gains
Risk aversion in the
case of future gains
Future
-
Present
Figure 2.8
Risk aversion related to the future.
over present losses (this could be termed 'future seeking' - we are
prepared to take a greater risk to minimise losses). However, there is
unlikely to be symmetry between the two, which is plausible on the
intuitive grounds that a postponed loss is less aversive than a post-
poned gain of a similar amount is attractive (Kahnemann & Tversky,
1984). This is illustrated diagrammatically in Fig. 2.8. In sustainable
development, where the emphasis is on reducing future losses, this
asymmetry could be important in reflecting the psychology of the
decision-maker within the technique.
If there is such a view at work in the minds of the decision-makers, it
has relevance to sustainable development and affects the way in which
those who are encouraging sustainable development are prepared to
argue for different models that allow a longer-term perspective to be
addressed. It would suggest a move away from the conventional eco-
nomic models to the adoption of a moral imperative which will demand
that future values are given significant weight. This could be done in
some cases by legislation and regulation that requires minimum stand-
ards to be kept - say the reduction in major pollutants, or it could be
that business advantage is achieved by taking the long-term view.
There are already instances in banking where banks that take an ethi-
cal stance in their investments have managed to increase their perform-
ance substantially. However, this may be the absorption of the niche
market of those investors sensitive to these issues. Nevertheless, it is a
start and with further education in these issues it may be that the minor-
ity niche market becomes the mainstream. Directives such as those con-
tained in the Agenda 21 documents and adopted by many authorities
throughout the world will hasten the take-up of a longer-term assess-
ment. There is little doubt that it will require a variety of approaches to
ensure that the concepts of sustainable development are included as the
norm in addressing decisions in the built environment.
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