Risk Assessment: The Consumer as an Intuitive Statistician - Innovation and Marketing in the Pharmaceutical Industry - page 297

them do not know it”) or rates with or without a time period associated with the rate
of incidence (“In 1999, roughly 1 out of every 13 U.S. high school students reported
making a suicide attempt in the previous 12 months ….” or “Mental Illness will hit
one out of every two people in the U.S.” and “… 4.7 % of adults reported alcohol
abuse in 2001-2002, and 3.8 % reported alcoholism”). Research has shown that
these may not be the most effective ways at communicating the overall likelihood of
incidence, and could be reconstructed and/or reframed to be made more effective. It
is possible that merely making consumers aware of the base rates can affect their
risk perceptions, as there is a gap between people's perceptions of risk of death from
different causes and the actual base rates. For example, Feinberg ( 2012 ) reported
that only 21 % of women were aware that heart disease was a significant risk to
them and 46 % of all women believe that breast cancer is their most serious health
threat (vs. 4 % who accurately believe that it is heart disease).
The higher the base rate, presumably, the greater the likelihood that people will
recognize the fact that they may be at risk and take preventative action or undergo
screening. Therefore, many companies (for profit as well as not for profit) highlight
the overall likelihood of a disease with a specific goal of getting consumers to speak
to their doctors, get routinely tested (e.g., for skin or breast cancer), and stop engag-
ing in risk-causing behaviors (e.g., smoking for lung cancer). The problem is that a
large body of literature in judgment and decision-making and social psychology has
documented that people do not appropriately use base rate information and some-
times ignore it entirely. Providing base rate information can lead to consumers to be
optimistic (underestimating their risk), become realistic (i.e., unbiased), and, on
occasion, become pessimistic (i.e., over estimating their risk; Lin et al. 2003 ).

10.9 Inputs to the Top-down Process: Base Rates

The top-down approach involves applying memory-based or contextually provided
base rates of incidence to a personal situation. The overall base rate may be applied
in differing degrees to one's own situation due to cognitive (translating the actual
base rate into a perceived base rate that would be captured in terms of the perceived
risk of the average person) and motivational factors (translating the perceived base
rate into perceptions of own risk vs. risk of the average person). The model is based
on the following formulation:

Base Rate = nN /

Psychophysical models of estimation have shown that people's estimates may be
biased and follow a power law with an exponent that is less than 1. Raghubir ( 2008 )
proposed that the salience of the numerator ( n ) is biased as a function of the likeli-
hood of being able to imagine oneself in the population, N . The larger the N , the less
easy it is to identify with it, and, therefore, the less effective the numerator n . Thus,
perceived base rates may be psychophysically represented as: