Your idea of risk and my idea of risk aren’t the same

I usually talk to my dad in Auckland on Sunday mornings. He’s 93 and sharp as a tack, still engaged with the world, still drives, lives at home and manages a couple of rental properties. Incidentally, the undoubted key to his well being is that he remarried at 75.

We fell to talking about COVID-19 and the actions that NZ and the Australian states are taking. At his age, if he caught it there’s a meaningful risk that it would be serious or fatal. Statistics show how, in Australia, deaths have been concentrated in the 70+ age group and among men rather than women.

You’d think that he’d be cautious about the risk that he might catch it. Yet, they have a lot of people in and out of the house in any week – housekeeper, district health nurses, the grocery delivery guy, pool service guy. NZ has adopted a “Lock the Gate” approach to management of the virus and has eradicated it at present.

Take Victoria as an example. There are 6.5m people in Victoria of whom 5,300 have been diagnosed with COVID-19, of whom 2,600 are still infected. So, to date 0.1% of the population has been infected, of whom 38 have died, meaning the chances of a fatal occurrence over the past 6 months if you are a Victorian are 0.0006%, and materially less if you are under 60. That’s a long tail risk. In the same period, given a suicide rate throughout Australia of 12.2 per 100,000 p.a., there may have been 396 suicides in Victoria.

So back to my father, who having survived the Blitz as a boy, been a farmer, and dealt with all the other circumstances of a long life, has a much more sanguine view of risk than you might expect. He appears to assess risk intergenerationally. He has a fair number of grandchildren and great-grandchildren who are at various stages of entering the workforce.

For him the risks that need to be taken into account aren’t purely personal or purely health related. His view is that running the risk of significantly degrading the economy and consequently the career and life prospects of young people to protect the old and the old old – his cohort – is not what he wants the government to do.

Which is not to say that he is blasé about this or any other medical condition, but that, like investment decisions, this is a multivariate problem. And the weight which anyone places on individual risk factors is unique to them.