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University of Basel

“Risk can be positive, too.”

Interview: Andreas W. Schmid

What determines our willingness to take risks? Cognitive psychologist Jana Jarecki tackles this question in her research at the University of Basel. Her studies show that risk is generally not an end in itself, but rather a means to the end of satisfying certain needs.

Illustrated portrait of Dr. Jana Jarecki. (Illustration: Studio Nippoldt)
Dr. Jana Jarecki. (Illustration: Studio Nippoldt)

UNI NOVA: Dr. Jarecki, you are a decision researcher. How often do you choose to take risks yourself?

JANA JARECKI: Certainly more at work than in my private life. Being a researcher is a risky proposition, in the sense that research does not offer a great deal of job security. If it was job security I wanted, I’d have to work in a different field.

UNI NOVA: How do you define risk?

JARECKI: In risk research, decisions that we describe as risky can have both negative and positive consequences. This definition contrasts with the everyday usage of the concept of risk, where it is almost exclusively associated with negative outcomes – hazards and costs. Risk can be positive, too. For someone with no climbing experience, attempting to scale a rock face may well involve a substantial risk of falling. For an expert climber the risk is much lower: Their experience puts them in a better position to evaluate the situation, and their skills have been honed through years of practice.

UNI NOVA: So, more experience means less risk?

JARECKI: In this particular instance, yes. But we have to be careful with generalizations of this sort – risk can vary from one area of life to the next. For example, studies have shown that on the stock market, complex investment strategies are not necessarily any more successful than investment decisions made at random by someone with no experience whatsoever. This is because in the stock market, risk is exogenous – which is to say, the market is subject to external influences. This means that even an experienced trader is often unable to anticipate events.

UNI NOVA: Warren Buffett would probably beg to differ.

JARECKI: There are people that have achieved somewhat unlikely things. Warren Buffett is one of them. But I’d like to see what would happen if there were 100 Warren Buffetts operating in the financial markets, rather than just one – and whether they would all achieve the same results. I have my doubts.

UNI NOVA: What determines a person’s propensity to take risks?

JARECKI: Risk-taking is not just a matter of personal preference – it also depends on the situation. A good example from the animal kingdom is given in a study by Alasdair Houston and John McNamara: Consider a little bird that needs 1,000 calories so as not to freeze to death at night in the winter. During the day, it searches for food. If the search is successful, there is no need to take risks. But on a bad day, on which the bird has still not found much food as sunset approaches, it is forced by the situation to take greater risks – such as venturing into areas with more predators. In this case, risk-taking is not an end in itself, but rather a means to the end of satisfying its needs.

UNI NOVA: To what extent do these findings from the animal kingdom apply to human behavior?

JARECKI: In a recent risk study, we confronted participants with situations analogous to that of the little bird. The participants were asked to play an online game in which they had to make decisions to reach a given score, with lower-risk and higher-risk options. When the target score was higher, their willingness to choose riskier options increased substantially, while lower targets resulted in less inclination to take risks. Our results, along with those of other studies, show that people have a good feeling for when it makes sense to select riskier or safer options.

UNI NOVA: Are men bigger risk-takers than women?

JARECKI: In 1999, a meta-analysis by the American psychologist James P. Byrnes concluded that women are on average somewhat less inclined to take risks than men. However, many studies at that time focused on just a small number of areas of life, such as traffic or health. In a study with 120 subjects, Andreas Wilke and I found that there are areas in which women are more willing to take risks than men. One example is family: While this is an area in which most people are fundamentally willing to take some degree of risk, women are even more so than men. Thus, in our experience, it isn’t accurate to say that men are bigger risk-takers in general – it depends on the context.

UNI NOVA: How do you explain women’s willingness to take more risks than men when it comes to family?

JARECKI: One of my master’s students is investigating the reasons for these differences in her thesis. There are various factors at play, but they’ve not yet been scientifically substantiated. What we have are hypothetical explanations, such as the suggestion that women have a different relationship with their offspring for purely evolutionary reasons: Women can be 100 percent sure that their children are in fact their own. Men can’t be that certain, unless they take a paternity test. (laughs) Perhaps, risk-taking also relates to experience, just like in the climbing example: Traditional social structures have given women more experience in dealing with family, while men are more experienced in other areas – leading them to evaluate risks differently. But I should reiterate, these are just speculative hypotheses. Moreover, I think it’s important to free ourselves from these rather rigid ideas about men and women and in my research, I consider the decision-making process itself much more interesting. Understanding the mental processes enables us to help people to make good decisions.

UNI NOVA: What makes people change their attitude to risk?

JARECKI: Here, we can again apply theory from the field of biology, which states that risk-taking is a means to an end. This means that risk-taking is not just a matter of having a particular attitude to risk, which might be situation- or gender-specific, but that there are situation-specific reasons behind our decision whether or not to take a given risk. One such reason is our need for resources.

UNI NOVA: What does that mean in practical terms?

JARECKI: Research on attitudes toward risk exists around the world. The results show that people in northern Europe or North America take far fewer risks than people in Africa or South America, for instance. To put it bluntly, if risky behavior is the only way of making enough money to send your children to school, then you are forced to take greater risks. This shows that people’s risk behavior is heavily influenced by their circumstances.

UNI NOVA: Would it be desirable for people to take more risks?

JARECKI: There are some areas where it makes sense, such as the stock market. Statistics show that in the long run, shares yield higher returns than fixed-interest bonds. However, you have to be willing to accept the risk of high price fluctuations with losses. Career choices are another example: To boost progress and innovation in society, it would quite certainly make sense for more people to launch start-ups. However, many people equate being self-employed with a high degree of risk, and therefore they shy away from it.


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