The vast majority of people living in areas of America at risk

Optimism Bias let’s us do all sorts of risky things that we want to do, from bungee jumping to driving and texting to living in places where we want to live even if those places are dangerous. It lets us buy the house in the beautiful but fire prone forests of the Colorado mountains, or on the beautiful but hurricane prone shores of North Carolina. It lets us take the job in LA or San Francisco, where a devastating earthquake in the next 50 years is a near certainty. It helps explain why we live in the lahar zones of volcanoes like Mt. Rainier or Mammoth Mountain California. It even helps explain why we don’t buy insurance against low probability risks. Fewer than 20 percent of California homeowners in earthquake prone areas have earthquake insurance. The vast majority of people living in areas of America at risk of severe flooding have no flood insurance. Why get insurance for low probability risks, even if they are disastrous, they wonder? After all, “It won’t happen to ME.”

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