Will Wilkinson - Latest Comments in Illusions of Risk

Re: Illusions of Risk

mike — Thu, 26 Oct 2006 19:10:06 -0000

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.

Re: Illusions of Risk

Timothy — Thu, 26 Oct 2006 12:44:22 -0000

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

Re: Illusions of Risk

Glen — Thu, 26 Oct 2006 03:08:29 -0000

"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).

Re: Illusions of Risk

monkyboy — Wed, 25 Oct 2006 17:20:32 -0000

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...

Re: Illusions of Risk

Will Wilkinson — Wed, 25 Oct 2006 14:59:09 -0000

Cold.

Re: Illusions of Risk

nobody — Wed, 25 Oct 2006 14:53:56 -0000

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

Re: Illusions of Risk

monkyboy — Wed, 25 Oct 2006 01:16:21 -0000

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!