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Economists have traditionally viewed the behavioral response to risk as continuous and proportional. In contrast, psychologists have often contended that people have little control over their response to risk that is dichotomous, nonproportional, visceral, and fear based. In extreme cases, this automatic response results in the stigmatization of a product, technology, or choice, which seemingly cannot be eliminated or reduced. In resolving these contrasting perspectives, we review four recent studies that blend behavioral economics and psychology. Together, they provide evidence for a dual‐process decision model for risk that incorporates both reason and fear. They show consumers' responses to perceived risk as a mix of proportional and dichotomous (safe/unsafe) responses that are relatively more continuous in situations where deliberation is possible, and more dichotomous in emotional or stressful circumstances. These findings reconcile mixed results in past studies, and, more importantly, the dual‐process model allows a clear definition of stigma, and suggests new ways to mitigate stigma and to help manage potentially damaging overreactions to it.

The world's governments look set to commit the same fundamental economic errors to obstruct the development of natural resources outside the earth's atmosphere as have hampered the exploitation of the earth's seabed. Professor Sandler and Schulze of the Universities of Colorado and Wyoming, argue that, without the establishment of property rights in slots in the earth's orbit, in the electro‐magnetic spectrum, and other outer space resources to allow private development, mankind may forego many of their benefits.

In recent years, benefit‐cost analysis has been increasingly applied to large societal decision problems (such as developing a fast breeder energy economy) which involve both risks to society and analysis of very long‐term consequences possibly extending over many human generations. This paper examines the philosophical underpinnings of the technique which is a special case of utilitarianism, and compares implications of the technique to those arising from alternative ethical systems in analyzing questions of public safety. Ethical systems which emphasize the good of the whole, such as utilitarianism, are shown to differ sharply in decision outcomes from those which emphasize the rights of the individual, such as libertarianism. It is suggested that benefit‐cost analysis should be broadened to include alternative weightings of benefits and costs consistent with a variety of ethical views.

Health risk beliefs of homeowners near a landfill site were assessed in a survey and compared to expert judgments of the health risks of living near the site. A bimodal distribution of health risk beliefs suggested sharp disagreement between the experts and at least some of the residents. Correlates of high risk beliefs included perception of odor from the site, exposure to media coverage of the problem, having children living at home, age (younger respondents more concerned), and gender (females more concerned). An aggregated neighborhood health risk belief predicted reductions in home prices even after controlling for home physical characteristics, such as size and other disamenities such as proximity to a freeway. In the 4100 homes near the site, the estimated depression in property values was estimated to total about $40.2 million before the site was closed and to be about $19.7 million after closure. Implications of these results for community conflict and for benefit‐cost analysis of hazard site remediation are discussed.