Questions that are rarely asked

by on September 2, 2008 at 2:55 pm in Science | Permalink

So if we could get people to exercise more, would they become more risk-loving, want less insurance, make more aggressive investments, and induce faster economic growth?  Would this be a good thing?

That’s Robin Hanson, the basic empirical result is that physically weaker people are more risk-averse in a wide variety of settings.

1 a student of economics September 2, 2008 at 3:14 pm

Perhaps it depends on the exercise. Robin seems to have in mind strength training.

But what if the exercise were aerobic conditioning, e.g. long runs. That might increase life expectancy, and according to most economic models, that could lead to more risk aversion.

2 Bernard Yomtov September 2, 2008 at 5:11 pm

A good point by Cyrus, I think.

3 Robert Olson September 2, 2008 at 5:29 pm

My immediate concern is whether we look at absolute strength or relative strength. Those that feel confident in their prowess relative to others (IE, higher social standing) might be more likely to take on greater risk, especially if they obtained this greater strength through training (accomplishing goals=higher risk tolerance?) or constant fighting (reinforcing the notion that they are stronger than their peers).

What I find most interesting:
“Predictions for men and women differ
only slightly by the gender of the predictor: both men and women underestimate their target’s risk
tolerance, but the difference is especially high for female targets.”
Meaning people think women are much more cautious than they actually are, if I am reading that correctly. That could explain a lot of the wage and promotion gap within high status job tracks at major corporations.

Especially…
“It is heavy women who are seen as less risk-accepting.”

4 Lord September 2, 2008 at 7:40 pm

OTOH, the rich frequently become less risk adverse.

5 joan September 3, 2008 at 12:34 am

Looking at the current problems in the financial markets it is hard to believe that making people, or at least bankers, less risk adverse is good for the economy, or economic growth.

6 josh September 3, 2008 at 12:59 pm

Even if it is not all selection bias, I wonder if relative strength is actually the important factor, making it a zero sum game.

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