Determinants of risk-taking: Behavioral and economic views

The concept of risk-taking is examined from various perspectives: economic, decision theoretic, and psychological. Multiple factors are discussed as complicating the extraction of any presumed risk-taking propensity from a person's real-world behavior.Problem structuring, beliefs, andvalues (defined here as riskless as opposed to risky utility) may of course underlie differences in risk behavior. In addition,context andprocess factors can induce variance in risk-bearing. Also,portfolio effects (including cross-sectional, multiattribute, and longitudinal) may greatly complicate the measurement of risk-taking propensity. Lastly, the presence of incompletemarkets (via which risks can be partially diversified and traded) may further mask the link between intrinsic and observed risk-taking. This article examines each of these measurement obstacles and sources of variance.     

Common genetic effects on risk-taking preferences and choices

Although prior research has shown that risk-taking preferences and choices are correlated across many domains, there is a dearth of research investigating whether these correlations are primarily the result of genetic or environmental factors. We examine the extent to which common genetic factors account for the association between general risk-taking preferences and domain-specific risk-taking preferences, and between general risk-taking preferences and risk taking choices in financial investments, stock market participation and business formation. Using data from 1898 monozygotic (MZ) and 1344 same-sex dizygotic (DZ) twins, we find that general risk-taking shares a common genetic component with domain-specific risk-taking preferences and risk-taking choices.

     

Digit ratios (2D:4D) as predictors of risky decision making for both sexes

Many important decisions involve financial risk, and substantial evidence suggests that women tend to be more risk averse than men. We explore a potential biological basis of risk-taking variation within and between the sexes by studying how the ratio between the length of the second and fourth fingers (2D:4D) predicts risk-taking. A smaller 2D:4D ratio has been linked to higher exposure to prenatal testosterone relative to estradiol, with men having lower ratios than women. In financially motivated decision-making tasks, we find that men and women with smaller 2D:4D ratios chose significantly riskier options. We further find that the ratio partially explains the variation in risk-taking between the sexes. Moreover, for men and women at the extremes of the digit-ratio distribution the difference in risk-taking disappears. Thus, the 2D:4D ratio partially explains variation in financial risk-taking behavior within and between sexes and offers evidence of a biological basis for risk-taking behavior.     

Older Latina Women and HIV/AIDS: An Examination of Sexuality and Culture as they Relate to Risk and Protective Factors

Older Latina women are one of the least studied American demographic groups with regard to social, health, or sexual behavior. This could leave social workers and other geriatric professionals unprepared for dealing with HIV/AIDS in this population. Currently, older Latina women are one of the fastest growing groups of new AIDS cases. Twenty percent of all women ever diagnosed with the disease are Latina and 5.5% of Latinas infected with the virus are older. The number of diagnosed infections is increasing in older women, including Latinas, in spite of recent declines in infection rates with younger populations. There are also a potentially large number of cases that go misdiagnosed or undiagnosed.

This article also addresses risk and protective factors related to gender roles, traditional Latino family values, religion, socioeconomic factors, health, and health care, with special attention to the triple jeopardy faced by this population by virtue of being female, seniors, and minorities. The article concludes with recommendations for the development of culturally competent practices with older Latinas and the development of a research agenda to better understand their risk-related and health-seeking behavior.     

Sex differences in single vehicle fatal crashes: a research note

Single vehicle traffic fatality data spanning the years 1982–1991 appear to support the convergence hypothesis: that women are becoming more like men in their behaviors. However, diminishing differences between male and female fatalities do not support a risk-taking model of convergence. Male drivers killed in single vehicle crashes have reduced risk-taking as measured by driving at night, driving on weekends, prior traffic convictions and crashes, and drunken driving. Female single vehicle fatalities have not risen because of increased risk-taking; rather, a greater proportion of women are now licensed to drive and they are driving more miles per year, which supports an exposure model over a risk-taking one.     

Who participates? Socioeconomic Factors Associated with Women's Participation in Voluntary Groups

Participation in voluntary groups is potentially an important way to create health promoting social capital. This paper investigates women's participation in voluntary groups, utilising data from a postal survey of 968 female respondents and in‐depth interviews with 30 women. Logistic regression was conducted to examine factors associated with frequency of women's group involvement. Not working full time, living in a married relationship, and having a university education were all significantly associated with regular involvement. The qualitative data further illustrated some of the ways in which these three factors were linked with women's involvement in groups. We conclude that women who were able to regularly participate were those who already enjoyed levels of social and economic privilege. Policies to promote social capital via participation might focus on identifying what types of group involvement benefit women's health, and increasing the accessibility of such groups to include diverse groups of women.     

Gender gaps in STEM in Japanese academia: The impact of research productivity,outside offers,and home life on pay

To understand differences in labor market outcomes between genders, economists must examine a complex array of potentially significant factors, such as institutional context, productivity differences, child-bearing and home production, and bargaining behavior. Many of these factors are not well captured by standard data sources. We use a new survey of academics in Japan to better understand the sources of gender pay differences. We find a 6% pay gap which persists when we control for research productivity, despite an institutional context shaped by explicit salary tables. We do not find a motherhood wage penalty, and the gender salary we document is not affected by differences in outside job offers.     

Reining in excessive risk-taking by executives: the effect of accountability

Performance-contingent compensation by means of stock options may induce risk-taking in agents that is excessive from the point of view of the company or the shareholders. We test whether increasing shareholder control may be an effective checking mechanism to rein in such excessive risk-taking. We thus tell one group of experimental CEOs that they may have to justify their decision-making processes in front of their shareholders. This indeed reduces risk-taking and increases the performance of the companies they manage. Implications are discussed.     

Dopamine receptor genes predict risk preferences,time preferences,and related economic choices

Outside of economics, researchers have recently identified genetic predictors of “sensation-seeking” that have been linked to risky and impulsive behaviors. We examine the implications of these genetic polymorphisms for economic behavior. Our analysis indicates that the 7-repeat allele of the DRD4 gene that regulates dopamine uptake in the brain predicts risk-taking and time preferences in economic experiments that allow for ambiguity, losses and discounting. These genetic polymorphisms can also be used to directly predict financial choice patterns that are consistent with previous findings in the behavioral genetics literature.     

Dopamine and risk choices in different domains: Findings among serious tournament bridge players

We explore how risk-taking in the card game contract bridge, and in a financial gamble, correlate with variation in the dopamine receptor D4 gene (DRD4) among serious tournament bridge players. In bridge risk-taking, we find significant interactions between genetic predisposition and skill. Among men with the 7-repeat allele of DRD4, namely 7R + men, those with more bridge skill take more good risks and fewer bad risks, while the opposite is found for less-expert 7R + men. Conversely, skill does not predict risk-taking among men without the 7R + allele. Consistent with some prior studies, we also find that 7R + men take more risk in the financial gamble. We find no relationship between 7R + and either risk measure among our female subjects. Our results suggest that the dopamine system plays an important role in individual differences in risk-taking among men, and is the first to distinguish between advantageous and disadvantageous risk-taking.     

Risk reduction or risk compensation? The case of mandatory safety-belt use laws

The technological approach to risk regulation seeks to lessen the incidence of mortality and morbidity by modifying environmental conditions. Insofar as risk-taking behavior is purposive, social scientists have predicted that technological progress may be negated by various forms of risk compensation. The validity of this hypothesis is tested in the transportation sector with data from the U.S. on the effects of new mandatory safety-belt-use laws. A fixed-effects model of traffic fatality counts is estimated using pooled data from 50 states during the 1975–1987 period. Results suggest that such laws have reduced mortality among car occupants to a degree that is compatible with the predictions of technologists. However, there is weak evidence of increased mortality among some nonoccupants, a pattern predicted by risk-compensation theorists. The lifesaving effects of belt-use laws are largest in states that permit primary police enforcement and appear to be somewhat larger for front-seat occupants age 21 and under. Although offsetting behavior appears to be small relative to lifesaving effects, it may take several more years for any compensatory behavior to achieve a new equilibrium.This research was supported in part by a grant from the Centers for Disease Control to the New England Injury Prevention Research Center.     

The impact of childhood maltreatment on young adults’ mental health: Evidence from the Philippines

Using a new retrospective data set on young Filipino adults, this study aims to quantify the prevalence, risk factors, and mental health consequences in later life of childhood maltreatment in the Philippines. A survey was conducted with a sample of 155 adults (83 women, 72 men) aged 18–24 living in Quezon City, the largest metropolitan city in the Philippines. Findings show that four out of five young Filipino adults experience minor physical violence during childhood, while one out of four suffer severe physical violence. Boys from less educated families that grow up in urban environments face the highest risks. While we find a strong link between childhood physical abuse and young adults’ mental health, no such effect was found for experiences of psychological aggression. Childhood physical abuse was further found to have negative effects on young adults’ family relations, social relations, and overall satisfaction with life.     

Embodying Psychological Thriving: Physical Thriving in Response to Stress

In addition to the context of psychological health, thriving can be measured in the context of physical health. Moreover, thriving may be operationalized at a macro level (e.g., improved functional health status following acute illness or injury) or at a micro level (e.g., hormonal balance). The goal of this article is to examine physical thriving at the micro level, by investigating hormonal responses to stressful situations. In addition, we examine the role that psychological factors play in this relationship. Although stress-induced arousal has traditionally been viewed as negative, certain endocrine responses to stress can be health enhancing. Specifically, we propose that physical thriving results when there is a greater amount of growth promoting or anabolic hormones (e.g., growth hormone) than catabolic hormones (e.g., cortisol). Characteristics of the stressor (duration, frequency, and controllability) as well as psychological moderators such as one's cognitive appraisal of the stressor (threat versus challenge) play a role in determining the profile of response to stress. When an individual appraises intermittent stressors as controllable, she or he may display a resilient profile of stress hormone responding—rapid cortisol responses with quick recovery, and more importantly, cortisol adaptation when faced with similar stressors over time. This stress response is in turn related to better health. To substantiate some of these issues, we present data from a study examining women's cortisol reactivity in response to a repeated laboratory stressor and their self-reported growth from facing trauma. The results suggest that women who have grown psychologically from trauma may show quicker cortisol habituation to other stressors. Cortisol adaptation to stress may serve as one potential marker of resilient psychological and physical functioning.     

Young immigrants on long-term sick-leave

Sickness certification data for all immigrants 16–45 years of age on long-term sick-leave enlisted at a local health insurance office were studied. The diagnostic pattern was remarkably homogeneous, characterized by imprecise pain and/or imprecise mental disorders. Clinical data were provided by a multiaxial evaluation of 52 people (mean age 38 years, mean length of sick-leave 1 year, full-time). Ratings of pain behavior and functional ability regarding occupational duties were also included. Nearly half (44%) had few social contacts both within their ethnic group and Swedish society. Half (58%) were assessed as being exposed to moderate or severe psychosocial stressors, and many had an associated mild or moderate depressive disorder. Muscular pain was the most frequent physical disorder. Pain behavior was common and was associated with the length of sick-leave. Two-thirds were assessed as being able to work at least part-time. The multiaxial evaluation system proved useful for differentiating important incapacitating diagnostic factors. Nevertheless, the examining doctors seemed to have been influenced by the participants' pain presentations when rating their functional ability. The study thus illustrates the ease with which a vicious circle of pain behavior and further sickness certification could be created. In conclusion, social distress and iatrogenic factors may have played an important part in the sick-leave pattern seen in this group of young immigrants.     

Predicted risk perception and risk-taking behavior: The case of impaired driving

Research suggests an association between risk perception and risk-taking behavior in a variety of contexts. There is empirical evidence that perceived risk is generally biased and that perception of risk influences behavior. Perception of risk can be endogenous. It is therefore more appropriate to instrument risk perception. This article studies the perception of the risks associated with impaired driving and the relation between predicted risk perception and driving behavior. We survey a sample of license-holders, half of whom are drivers with a past conviction for impaired driving, the other half or control group without such conviction. Predicted perceptual biases are shown to influence actual driving behavior.

Facility Organizational and Facility Resident Characteristics in Nursing Homes Serving Residents With a Mental Health History

ABSTRACT

The prevalence of mental health disorders among nursing home residents has been noted. The purpose of this study was to identify characteristics among nursing homes serving residents with a mental health history. A retrospective, cross-sectional design was conducted using the 2003 national Online Survey, Certification, and Reporting facility data merged with the resident-level Minimum Data Set resulting in 2,499 nursing homes. Across facilities, 22% of the total residents had a diagnosis of a mental disorder not including any form of dementia. Among those with a mental health history, 53% of facility residents had depression and 37% had schizophrenia.     

Evidence for the use of an algorithm in resolving inconsistent and missing Indigenous status in administrative data collections

Measures of the gap in living standards, life expectancy, education, health and employment between Indigenous and non‐Indigenous Australians are primarily derived from administrative data sources. However, Indigenous identification in these data sources is affected by administrative practices, missing data, inconsistency, and error. As these factors have changed over time, assessing whether the gap between Indigenous and non‐Indigenous Australians has changed over time, based on data unadjusted for these sources of error can potentially lead to misguided conclusions. Combining administrative data on the same individuals collected from different sources provides a method by which a more consistent derived Indigenous status can be applied across all records for an individual within a linked data environment. We used the Western Australian Data Linkage system to produce derived Indigenous statuses for individuals using a range of algorithms. We found that these algorithms reduced the amount of missing data and improved within‐individual consistency. Based on these findings, we recommend our Multi‐Stage Median algorithm be used as the standard indicator of Indigenous status for any reporting based on administrative datasets when multiple datasets are available for linkage, and that algorithmic approaches also be considered for improving the quality of other demographic variables from administrative data sources.     

Does vegetation matter for the criminal behavior among people with serious mental illness?

This study attempts to examine the effect of vegetation on arrests of offenders with and without serious mental illness (SMI). Data from the MacArthur mental health court study were analyzed. Objective arrest data were obtained 12–18 months pre‐ and post‐court involvement between 2005 and 2007. Vegetation data were captured by the normalized difference vegetation index, which can be regarded as a general measure of “vegetation” and linked with GeoID, obtained from the American Community Survey. We analyzed data of sociodemographic factors (e.g., age, gender), crime‐related factors (e.g., age of first arrest), and vegetation in related to the crime on 652 offenders with mental illness. Multilevel negative binomial regression revealed no significant effect of vegetation on arrests among offenders without SMI; however, for those with SMI, a significant variation in vegetation on arrests was found among all study models. Our findings suggest that vegetation is significantly associated with arrests, with a positive effect on reducing the recidivism only among offenders with SMI. Given that practice and policy almost exclusively focus on individual factors of crimes, it is important to have more considerations about how neighborhood factors affect criminal behavior, depending on SMI in order to have more comprehensive methods of crime prevention.     

Gender, Financial Risk, and Probability Weights

Women are commonly stereotyped as more risk averse than men in financial decision making. In this paper we examine whether this stereotype reflects gender differences in actual risk-taking behavior by means of a laboratory experiment with monetary incentives. Gender differences in risk taking may be due to differences in valuations of outcomes or in probability weights. The results of our experiment indicate that value functions do not differ significantly between men and women. Men and women differ in their probability weighting schemes, however. In general, women tend to be less sensitive to probability changes. They also tend to underestimate large probabilities of gains more strongly than do men. This effect is particularly pronounced when the decisions are framed in investment terms. As a result, women appear to be more risk averse than men in specific circumstances.     

For whom does social comparison induce risk-taking?

A ‘bonus culture’ among financial traders has been blamed for the excessive risk-taking in the run-up to the latest financial crisis. I show that when individuals are more social gain seeking than social loss averse (i.e. gloating is stronger than envy), social comparison predicts more risk-taking as well as a preference for negatively correlated gambles. Testing these two joint propositions in a laboratory experiment, I find that preference for positively or negatively correlated outcomes is highly correlated with risk-taking in a social risky investment task. While only a third of subjects prefer negatively correlated outcomes in a peer comparison setting, in line with relatively stronger social gain seeking, those subjects invest on average 50 % more in a risky gamble in their peer comparison setting than a reference group that made the same decision in an isolated individual setting. Subjects with a preference for positively correlated outcomes, in line with relatively stronger social loss aversion, do not show a higher propensity to invest in a risky gamble compared to the individual reference group.