What can an economist teach travelers about risk?

It turns out I’m not alone. According to economist Allison Schrager, the author of An Economist Walks into a Brothel: And Other Unexpected Places to Understand Risk, human intuition is a pretty crappy gauge for risk. “Things like shark attacks and plane crashes really resonate with us,” says Schrager, “so we tend to put a much higher weight on them. Even though driving to the grocery store, honestly, is statistically probably riskier.”

RELATED: How risky is flying, really? 

That doesn’t mean that I’m doomed to a lifetime of anxious flights. Schrager points out that while we’re not born with the skills to do good risk assessment, evidence shows we can get better with time and practice. “People who are experienced risk-takers, like traders or professional gamblers tend to take risk in a much smarter way,” she says, “but just because they’re more experienced at it.”

Her observation that our judgement is often faulty—and that we can learn to do better—is at the core of Schrager’s book, which brings the tools of risk management out of the office and into the dusty fray of the real world.

Along the way, she met sex workers, big-wave surfers and horse breeders, all professional risk-takers who have developed their own strategies for mitigating their fields’ unique dangers. What she found is that risk is everywhere—but that it’s not necessarily a bad thing. “If you don’t take risks, you’ll never even go outside,” says Schrager. “It’s a really important part of life.”

“If you don’t have a clear goal, you don’t know how much risk you need to take on, and you might take risks for the wrong reason.”

- Allison Schrager

It’s especially true for travelers, whether you’re diving into your first-ever backpacking trip or planning an annual mountain-climbing expedition. And taking a page from an economist’s playbook doesn’t mean minimizing all possible risk. Instead, Schrager emphasizes the value of looking clearly at risk so you can know when to back off—and when to push yourself even harder.

The first step, says Schrager, is to clearly define your goals. “If you don’t have a clear goal, you don’t know how much risk you need to take on, and you might take risks for the wrong reason.”

If you’re hiking a mountain, start by deciding what you’re hoping to achieve. Maybe your group is just looking for a fun day out, which means setting a turnaround point with plenty of time for cruising back to camp.

If it’s summit-or-bust, you’re looking at a riskier undertaking; a choice you can mitigate by packing gear to deal with at night at high altitude. From an economist’s perspective, managing risk is all about efficiency—and Schrager points out that doing it right means squeezing maximum reward from every bit of risk you take. 

Once you’ve settled on how much risk to tackle, turn your attention to managing the fallout. What happens if everything goes wrong? For economists, insurance is a key tool for mitigating risk, a strategy that’s equally valuable for planning adventures.

“There’s no way you can ever make surfing an 80-foot wave safe since it’s something that’s risky by definition,” says Schrager. “But there are ways you can make it safer.” If you’ve ever grabbed an extra bottle of water before setting out on a hike, you’re already wrapping insurance into your adventures.

RELATED: Notes on facing fears during adventures

To layer on some additional insurance, add an emergency kit to your day pack, bring a few more warm layers, and consider what you’ll do if key equipment fails. On a recent hike across the Sinai Peninsula, I packed a satellite beacon that could trigger an emergency rescue. And after scrolling through reports of rabies in the area, I sprang for an expensive round of vaccinations.

The other kind of insurance, of course, is actual insurance. Even if you don’t use travel insurance under normal circumstances (and, by the way, you really should), it can bring peace of mind when you’re pushing your boundaries in an unfamiliar part of the world—peace of mind plus an on-call medevac.

Of course, none of this helped me on that terrifying flight over Newark. My travel insurance was useless as I stared down a truly scary turn of events. After a deep dive into risk management, Schrager concludes her book with a chapter that resonates with my memories of that day: Uncertainty Happens.

“Be mindful that your plans can fall short, and things can happen that you can’t anticipate. In that case, always be prepared and open to changing your plan.”  

- Allison Schrager

Comparing risk management to planning a road trip, Schrager writes that “the map certainly increases the odds of a successful journey, but it can’t tell you if a truck will smash into your car.”

And sure enough, traveling offers the occasional sneaker wave, bus-sized boulder or oozing tropical disease to throw us off our games. According to Schrager, flexibility is the best policy when those come swerving towards you. “Be mindful that your plans can fall short, and things can happen that you can’t anticipate,” she says. “In that case, always be prepared and open to changing your plan.”  

In my case, I changed the plan to bracing for an emergency landing. When the plane finally came to a stop, sitting on the runway swarmed with rescue vehicles, everyone was fine. (Even the girl who’d puked in a bag.) We filed up the jet bridge into Newark airport, then I set off for the gate where my flight to Bogotá would board in just a few minutes.

And you know what? I wasn’t too worried about a plane crash. After all, flying is the safest way to travel.