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Illusions of Risk

Started by Will Wilkinson · 9 months ago

Despite my digs at Jacob Hacker’s new book, I don’t find it implausible that middle-class Americans do feel that their lives are economically precarious, even when they are, in objective terms, immensely economically secure. The question is whether attempting to ameli ... Continue reading »

7 comments

  • monkyboy

    2 years ago

    I wonder how many Catoites will get to test your theories if the Democrats return to power?

    Don't forget to document your happiness levels as you search for another job guys!
    reply
  • nobody

    2 years ago

    I'll definitely document the changes in my happiness levels if you get run over by a cement truck.
    reply
  • Will Wilkinson

    2 years ago

    Cold.
    reply
  • monkyboy

    2 years ago

    Hehe,

    I assume nobody at Cato has parents in a nursing home or children in daycare or a medical condition not covered by insurance?

    A drop in income for you guys will simply necessitate you construct a less pretentious persona...
    reply
  • Glen

    2 years ago

    "How much of your income would you be willing to put at risk to get a chance at twice your current income? If you’re like most Americans, the answer is “not much”—and for a simple reason: While you’d love to have more money, your life would be thrown into turmoil if your income dropped by, say, half."

    Loss aversion is a real phenomenon, but it irritates me when people use it willy-nilly. The attitude described in the passage above doesn't require anything more than plain old risk aversion (though loss aversion *could* also be involved).
    reply
  • Timothy

    2 years ago

    I think loss aversion is pretty easily explained by a diminishing marginal utility of wealth.
    reply
  • mike

    2 years ago

    If somebody will show me where I can find a 50/50 shot at risking half my income for the chance to double it, I may consider the risk.
    Odds worse than that and I think you can substitute "prudent" for "risk aversion". It seems that Americans are risking a lot more than people give them credit for. I don't know how we can have record debt, extremely low savings AND the insatiable desire for non-essential goods without betting that our futures will be at least as good if not better. Unless we're just stupid.
    reply

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