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Framing Decisions As Gains Or Losses: The Case Of Yucca Mountain

On Sunday, March 4, 2012 the Reno Gazette Journal reported results of the following online poll: Should Nevada stick to its opposition to using Yucca Mountain as a nuclear waste facility?  Eighty percent of respondents reported no and 20% yes.  The poll was accompanied by opinion articles for and against Yucca Mountain being developed as a temporary storage facility and research facility.  Writing against Yucca Mountain, Nevada Attorney General Catherine Cortez Masto states:

The reason for Nevada’s long-standing opposition to the Yucca project is that it poses grave risks to public health and the environment. While Nevadans’ initial opposition may have rested on the perceived unfairness of being singled out for a facility no one else wanted, the state has since constructed a well-substantiated, scientific case against the project which is, according to the Obama administration, “unworkable.” Simply put, Yucca Mountain cannot physically isolate waste from the human and natural environment.

Writing for Yucca Mountain, Tyrus W. Cobb states:

For Nevada, the benefits of hosting the spent fuel temporarily could be enormous. First, the direct economic impact is far greater than any other project that Brookings or state economic development officials envision. Indeed, closing Yucca has already resulted in the loss of more than 2,500 of the best paying and highly technical jobs imaginable — positions that would be immediately restored. Remember that $17 billion had already been expended to develop the repository, but that funding has been cut off, thanks to the adamancy of our elected officials.

What I found interesting about this debate was the results of the poll: 80% responded that Nevada should not continue its’ opposition to Yucca Mountain.  This result is in contrast with most prior public opinion polls that show most Nevadans are opposed to Yucca Mountain, and this public sentiment has likely contributed to almost all politicians in Nevada being opposed to Yucca Mountain.  Why the change in public opinion (in this admittedly unscientific poll)?

Two concepts I teach in my class on decision making may help explain the results.  The first concept considers the framing of a decision. Consider three possible frames for how a public opinion question on Yucca Mountain might be asked:

  1. Do you support the use of Yucca Mountain a permanent depository of nuclear waste?
  2. Should Nevada stick to its opposition to using Yucca Mountain as a nuclear waste storage facility or use the site as a research center and negotiate for benefits?
  3. Do you support Nevada negotiating with the federal government to host a temporary nuclear storage facility and research facility?

If the poll was framed as in #1 above, I would suggest most Nevadan’s would say no, they do not support the use of Yucca Mountain as permanent nuclear storage facility.  If the poll was framed as in #2 above, as it apparently was by the Reno Gazette Journal, then apparently 80% of respondents do not think Nevada should stick to its opposition of Yucca Mountain.  If the poll was framed as in #3 above, then I am not sure what the results would be.

What accounts for the differing results depending upon the frame?  Psychological research suggests that framing decisions as gains or losses significantly affects our choice.  For example, many people would not choose to not undergo a medical procedure where immediately after the procedure 10% of patients died and 60% were dead after five years.  On the other hand many people would choose to undergo a medical procedure where 90% were alive immediately after the procedure and 40% were alive after five years.  Notice that the statistical information describing the medical procedure is identical in both choices (i.e. 10% dead =90% alive, and 60% dead = 40% alive), but more people would choose the procedure when the data is presented the probability of living (gain) rather than the probability of dying (loss).

Looking at the three Yucca Mountain poll questions posed above within the lens of gains and losses, Nevada respondents would likely consider the hosting of a research facility to be a gain and the storage of nuclear waste to be a loss.  Thus #1 is primarily a loss (permanent depository of nuclear waste) and will be opposed, #2 is a small gain (as a research center and negotiate for benefits) and supported, and #3 as a gain and loss (host a temporary nuclear storage facility and research facility) making the decision more difficult.  I have to wonder whether Nevadans’ have actually changed their opinions regarding Yucca Mountain or whether the frame of the question changed the results.

As we move into the political election cycle and the airwaves are saturated with candidate advertisements, try and pay attention to how the marketing messages are framed.  While we might hope for positive issue ads to dominate, the reality is the negative attack ads are more effective and will likely drive candidate spending.

What do you think? Please share your thoughts in the comment section below.

James A. Sundali, Ph.D.

James A. Sundali, Ph.D.James Sundali is associate professor of strategic management. He received his Ph.D. from the University of Arizona and his MBA and bachelor’s degree in economics from California Polytechnic State University, San Luis Obispo. He has been at the University of Nevada, Reno since 1997 and has taught strategic management, corporate finance, game theory, bargaining and negotiation, individual choice behavior, organizations and the natural environment, the psychology of gaming, and managerial and leadership insights from film and literature.

What Can We Learn from Occupy Wall Street?

What is your take on the occupy Wall Street movement?  I have been fascinated by it and the ensuing debate regarding the 99% vs. the 1%.  Without clearly stating a goal or taking a political position, this loose confederation of protesters has impacted the conversation in society.  This morning I listened to a politician who said we should not be talking about these issues since it was a challenge to the free enterprise system.   While the politician might not be up for the debate, I have no worries that the free enterprise system can handle the debate.

One of the reasons this debate fascinates me is that it is my job to educate students who might be striving to become part of the 1%.  I haven’t seen a demographic breakdown but I would bet that a fair proportion of the 1% is business owners and business leaders many of whom were educated in business schools.  I wonder what values these leaders learned in business school.

I am currently reading a book titled The Ajax Dilemma: Justice, Fairness, and Rewards written by Paul Woodruff, a philosophy professor at University of Texas, Austin.  While the book does discuss philosophy, it is primarily about leadership.  The Ajax dilemma originates from the Trojan War in Greek mythology and is the story of two great warriors, Ajax and Odysseus, and which one of them should receive the coveted armor of the slain warrior Achilles from King Agamemnon.  Odysseus is the brilliant strategist who was the architect behind the Trojan horse.  Ajax is the workhorse soldier whose exploits on the battlefield are unmatched.  After the award goes to Odysseus, Ajax goes on a rampage and kills himself.  Ajax’s suicide creates deep division in the army.  Woodruff uses the story to frame the debate regarding the division of rewards.  Woodruff clearly uses Ajax to be representative of the 99% and Odysseus representative of the 1%.

When Agamemnon awards the armor to Odysseus almost all agree that Odysseus is more deserving than Ajax because without Odysseus the war could not be won.  Ajax on the other hand is replaceable, although it would take four or five soldiers to replace him.  But while Agamemnon’s decision is “fair,” the decision may have lacked “justice.”  Woodruff writes:

Fairness and justice are truly at war with one another.  Fairness is not wise.  Fairness is following principles wherever they may lead, regardless of people’s feelings.  Fairness is a trap in which justice and compassion die, where members of a team are hurt beyond repair.  Yet fairness has often been thought to be the heart of justice.  That cannot be correct.  The heart of justice is wisdom.

Wisdom is a quality of leaders.  It is not so mysterious as you may think, but it cannot be delivered by a formula.  Being wise, a leader pays attention to others and sets an example for the leaders who report to him.  The sort of action that is wise in one situation may be foolish in another.  A wise leader may have a reason in mind that calls for action today and inaction tomorrow (pg. 62-63).

So where does Woodruff take us with this reasoning?  Does he provide us an answer as to how we should divide up the wealth between the 99% and the 1%?  No he does not.  But what he does do is show us very clearly that leadership requires wisdom.  A leader who is not wise and whose decisions lack justice will risk destroying a community.

This is the type of story that I like to discuss with my MBA students.  It is my belief that becoming an integrated and wise leader requires that you are connected to the world around you. Being connected means you need to pay attention to not just what is going on in your field but also what is going in the arts and humanities, in politics, in science and religion, etc.  So I admire the occupy Wall Street protesters not because I think they are right, or because that I think they are wrong, but because they have asked me to pay closer attention to an important issue and to clarify my thinking on it.

James A. Sundali, Ph.D.

James A. Sundali, Ph.D.James Sundali is associate professor of strategic management. He received his Ph.D. from the University of Arizona and his MBA and bachelor’s degree in economics from California Polytechnic State University, San Luis Obispo. He has been at the University of Nevada, Reno since 1997 and has taught strategic management, corporate finance, game theory, bargaining and negotiation, individual choice behavior, organizations and the natural environment, the psychology of gaming, and managerial and leadership insights from film and literature.

In 2006 he was awarded the B.J. Fuller Excellence in Teaching Award and in 2008 the Graduate Faculty Excellence in Teaching Award. In the last few years he has been involved in teaching abroad with classes in London, New York City, and Bilbao, Spain. His research is focused on experimental economics, behavioral game theory, behavioral finance, and individual choice behavior.