Final answer:
People are often made nervous by unpredictable or unclear situations, which relates to their perception of risk. Insurance is a common method for handling risk, designed to provide security against low-probability, high-impact events. The perception of control over such risks is associated with better mental health and reduced stress.
Step-by-step explanation:
The extent to which people are made nervous by situations they perceive to be unpredictable or unclear often deals with the concept of risk and how individuals manage it. Economic risks that are beyond an individual's control, such as a country experiencing a natural disaster, war, or massive unemployment, create a need for security so that people can provide for themselves and their families. The anxiety over uncertain events, like the potential for extreme physical danger following an alarm, also plays a role in how risk is perceived and handled. Insurance is one way individuals manage risk by mitigating low-probability but high-impact events. This essentially works through the pooling of risk among many individuals, aiming to cover the financial loss for the inevitable few who experience the insured-against events.
The perceived lack of control over one's environment can significantly increase stress and anxiety levels. Methods of handling risk, such as insurance, aim to provide a level of predictability and control over unpredictable events. Recognizing and planning for asymmetric risks, those that are low in probability but high in potential impact, is crucial as ignoring them could lead to severe consequences. Ultimately, the perception of control and the ability to influence outcomes are linked to better mental health and lower stress reactivity.