Economic inequality increases risk taking
TLDR
Higher inequality in the outcomes of an economic game led participants to take greater risks to try to achieve higher outcomes, suggesting that inequality may promote a range of poor outcomes, in part, by increasing risky behavior.Abstract:
Rising income inequality is a global trend. Increased income inequality has been associated with higher rates of crime, greater consumer debt, and poorer health outcomes. The mechanisms linking inequality to poor outcomes among individuals are poorly understood. This research tested a behavioral account linking inequality to individual decision making. In three experiments (n = 811), we found that higher inequality in the outcomes of an economic game led participants to take greater risks to try to achieve higher outcomes. This effect of unequal distributions on risk taking was driven by upward social comparisons. Next, we estimated economic risk taking in daily life using large-scale data from internet searches. Risk taking was higher in states with greater income inequality, an effect driven by inequality at the upper end of the income distribution. Results suggest that inequality may promote poor outcomes, in part, by increasing risky behavior.read more
Citations
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References
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Journal ArticleDOI
A Theory of Social Comparison Processes
TL;DR: In this article, the authors pointed out that there is a strong functional tie between opinions and abilities in humans and that the ability evaluation of an individual can be expressed as a comparison of the performance of a particular ability with other abilities.
Book
The Theory of the Leisure Class
TL;DR: The Pecuniary standard of living is defined in this paper as "conspicuous leisure, conspicuous consumption, and higher learning as an expression of the pecuniary culture".
Journal Article
The Theory Of The Leisure Class
TL;DR: The Pecuniary standard of living is defined in this paper as "conspicuous leisure, conspicuous consumption, and higher learning as an expression of the pecuniary culture".
Journal ArticleDOI
Satisfaction and comparison income
Andrew E. Clark,Andrew J. Oswald +1 more
TL;DR: In this paper, the authors tried to test the hypothesis that utility depends on income relative to a "comparison" or reference level using data on 5,000 British workers and found that workers' reported satisfaction levels are inversely related to their comparison wage rates.