Risk Aversion

How risk averse should I be?

Learned in PSYCH101.

The results indicated that individuals who were raised in low SES neighbourhoods with poor access to resources and high rates of violent crime and mortality became less risk averse in the present but discounted future payoffs more (because they may not live to see the future) after exposure to the threatening news story. In other words, if you have few resources, threat motivates you to take risks and to live for the present.c

Conversely individuals who were raised in high socioeconomic neighbourhoods responded to the threatening news story with greater risk aversion in the present but lower discounting of future rewards. In other words, if you have resources, threat motivates you to conserve what you have and to wait for something better in the future.