The Unmistakable Creative Podcast Alison Shcraeger: The Economics of Risk and What a Las Vegas Brothel Taught Me About Uncertainty
Oct 31, 2025
In this engaging conversation, economist Alison Schrager dives into the economics of risk, drawing from her unique experiences studying sex workers in Las Vegas. She explains how most people misunderstand probabilities and highlights the power of natural frequencies for better decision-making. Alison argues that past data can be misleading and discusses the emotional biases that affect our risk assessments. She also touches on career choices and how diverse experiences can lead to richer opportunities. Get ready to rethink how you approach uncertainty!
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Risk Shows Up In Prices
- Prices in markets reflect risk premiums; higher prices can signal paid reductions of risk.
- Alison found Nevada brothel rates were three times underground prices because customers pay to reduce risk.
Take Risks With A Clear Goal
- Define a clear goal before taking any risk to know how much risk is necessary.
- Use the goal to decide timeframe and the minimum safe, or 'risk-free', option.
Past Data Is Imperfect But Practical
- We measure risk often by past data even though past data imperfectly predicts future outcomes.
- Alison notes data is what we have, so we use past experience to set risk limits like personal surfing thresholds.
