"Cost-benefit analysis embodies techniques for the analysis of possible harmful outcomes when the probability of those outcomes can be quantified with reasonable confidence. But when those probabilities cannot be quantified (“deep uncertainty”), the analytic path is more difficult. The problem is especially acute when potentially catastrophic outcomes are involved, because ignoring or marginalizing them could seriously skewing the analysis. Yet the likelihood of catastrophe is often difficult or impossible to quantify because such events may be unprecedented (runaway AI or tipping points for climate change) or extremely rare (global pandemics caused by novel viruses in the modern world). OMB’s current guidance to agencies on unquantifiable risks is now almost twenty years old and in serious need of updating. It correctly points to scenario analysis as an important tool but it fails to give guidance on the development of scenarios."
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