What is the difference between risk and uncertainty? In economic terms we can call a venture risky, if the probability of it failing is much more than the probability of it succeeding. It means that risk is something which can be attributed a value but on the other hand uncertainty cannot be quantified. We can call a particular phenomenon uncertain if the probability of it happening is very less but we might not be able to determine an exact value of this probability. In simple terms uncertainty is much more riskier than risk to a decision maker. This key difference plays a important role in our lives. We know that if we do not study for an exam we risk failing but we also know that even if we do study there is uncertainty that we still might fail due to unforeseen circumstances. Risk therefore can be hedged away but uncertainty cannot be, in most cases.

Uncertainty is something which goes beyond our understanding and control. Everyone wants to make things certain. We invest heavily in retirement plans, education for our children, car insurance, medical insurance, cars with best safety features and what not to make sure that we are ready for the uncertainty that might become certain at some point in the future. There is an amazing Ted Talk by Ken Robinson in which he talks about the predominant education system. He stresses upon a point that more than a million kids will be starting school this year and they will be graduating school twenty years from now. Twenty years of time in the future can account for a lot of uncertainty when we don’t even know what tomorrow will be like and each of these million kids is being prepared for a time in future that many of them might not even get to see and even if they do none of them has any idea what the world will be like at that time. He says that we are being educated out of our curiosity. Curiosity is what drives growth and change. It is what forces us to keep moving forward in the face of risks and uncertainty.

The best way that we cope with uncertainty is through prayers. Religion plays a very important role here. Men of science have been know to give into prayers in the face of uncertainty. People will go through hardships and lack of food and even water because they believe that it might make the uncertain certain. The most amazing phenomenon is that even when the prayers don’t have the intended effects people are not swayed in their determination to pray. There must be some reason behind this. Let us look at a behavioral bias before we move to reason upon this. In cricket most audience will believe that if a batsman has scored five sixes in an over then then probability of his scoring a sixth six is very high even though mathematically the probability is still 1/6 (The batsman can score 1,2,3,4,5 or 6 runs respectively which gives us a sample space of 6 and the expected outcome which we are aiming for is 6.) The probability of the batsman scoring a particular value of runs remains the same no matter what he scores in the preceding ball. The same is the case when we get more than one heads one after another we start to believe that the next coin toss will also end up as heads even though the probability of getting a heads or as tail remains the same i.e. 1/2.

If praying was a sport then after constant no reply to our prayers we should start to believe that the next prayer will also have a high probability of not being heard and that should act as a deterrent against future prayers but that is something which is not observed in many cases. Most often people will increase the frequency of their prayers rather than keeping their frequency same which mathematically would be the optimum thing to do because for every prayer the probability of it being heard is the same as it not being heard i.e. 1/2, the same as the tossing of a coin. The root of most irrational behavior lies at uncertainty.

Daniel Kahneman and Amos Tversky wrote the amazing book, “Thinking Fast and Slow” in which they talk about “Decision Making Under Uncertainty.” They expose us to the concept of “Loss Aversion”. Loss Aversion means that losses hurts us much more than corresponding gains give us pleasure i.e. the pain of losing a rupee is felt more strongly than the pleasure of gaining a rupee. They extend the expected utility curve to show that utility doesn’t just depends upon the change in the value but it also depends upon the direction in which the change happens. Investors are so scared of uncertainty that they end up making decisions which hurt them in the long run leading to decreased returns.

Coming back to the prayer now we can see that a prayer not heard will cause much more pain that the pleasure that a prayer heard might bring, so people increase their frequency of prayers when their prayers are not heard. I am using prayer as a representative of all mechanisms that a person might use when making decisions under certainty and thinking about the consequence of those decisions. At this very juncture we can justify that the creation of a supernatural creator of the universe would make total sense to those who are afraid of the uncertain or the unknown. This is the reason why religion and other ideologies that uses the premises of religion pervades our culture and society.

Religion in its entirety is not overwhelming after all it was created by humans themselves. An animal will not dive deep into all the possible consequences of their decision and then try to chose the optimum but we humans always weigh the different options that we have and try to make ourselves believe that we have made the right decision until time tells us otherwise. This is very well and good but sometimes it can take over our lives. We end up wanting everything to end up as we want it. We try to control everything around us from people to circumstances and invest all our financial, physical and mental resources into doing so. We go on with the belief that if we do everything in the right manner everything will fall into place in the end even though we don’t even know when our end will come. We are so used to reading stories narrated in hindsight that we stop living in the foresight. We stop taking risks in life and slowly drain ourselves away of our curiosity.

The best and the worst thing about uncertainty is that we do not know what is going to happen. Murphy’s Law states the same thing that whatever is supposed to go wrong will go wrong. We are so much influenced by Negativity Bias that we always expect for the worse. It has an evolutionary advantage and helps in survival but in other contexts it can be brutal. Most of us understand Murphy Law as: “Everything will go wrong.” Once we start to believe that, we lose sight of everything and give in to nihilism. Misunderstanding something is worse than ignorance. It like having a gun which we do not know how to use and in the end we will surely end up shooting ourselves or someone else. If we do not know what’s in store for us why should we assume that something bad will happen to us. I suggest we assume that something good will surely happen to us. Once again the probability of a good thing happening or a bad thing happening remains the same i.e. 1/2.

No matter how hard life gets the odds of something good or bad happening to us in the future remains the same and only those who have the curiosity to keep moving forward and find out what is in store for them gets to do miraculous things in life. We do not need a religion for that or the belief in a supernatural power for that. Our life is a collection of smalls events that culminates into big events rather than one drastic event that might happen to us out of nowhere and change our lives. Creationism makes us believe that earth was created in one chance event and so were we humans but that would be really uncertain and to accept that uncertainty to be so certain would go against all our beliefs.

Life as Darwin expressed evolved gradually through cumulative selection over a period of million years. It might look like a chance event but it wasn’t. We humans evolved from molecules swimming about in the primeval soup and a single step in evolution might have been pure chance but each characteristics of any organism that lives in this ecosystem was carefully selected for its utility towards the reproductive success of the organism. Evolution was not random and so our lives also aren’t random despite all uncertainties. Our personality and behavior evolves with time based upon our own habits and past behavior and their interaction with the surrounding. We might have a hard time today trying to run a mere hundred meters but with time slowly we can improve our capacity by going on daily runs. What is uncertain today can be certain tomorrow based upon the small steps that we decide to take towards that certainty. Prayers might help us today but in the long run all it will give us is false hopes.

I still remember once sitting on the passenger seat of a car which my friend was driving at a very high speed and I was scared to death, thinking I might die the very next minute, but all of a sudden I thought that if this is the way my life is supposed to end then this is it, there is nothing I can do to change it because people have died in a stationary car also and I let go and had the most exhilarating ten minutes of my life. The safest way to drive is to not drive at all. Once we learn to deal with uncertainty everything just starts to fall into place. The time is now to let go of what we think that we known for sure and think again because if anything can happen why not believe that something good will happen.