Exposure to danger leads those who grew up poor to gamble for immediate rewards.
MINNEAPOLIS --(July 6, 2011)--When faced with threat, people who grew up poor are more likely to make risky financial choices in search of a quick windfall, according to new research from the Carlson School of Management, University of Minnesota.
Published in the Journal of Personality and Social Psychology, "The Influence of Mortality and Socioeconomic Status on Risk and Delayed Rewards: A Life History Approach" by Vladas Griskevicius found that people respond to feeling threatened differently depending on whether people grew up in relatively resource-scarce or resource-plentiful environments.
The studies, which built upon earlier research on how mortality cues influence reproductive timings, found those who grew up resource deprived or felt poor were more likely to take risks for immediate rewards when they felt threatened. Subjects who were raised in a more predictable world never worrying about their needs responded to the same stressors by becoming more cautious.
"You can have two people who appear identical, but if they see that the world is a dangerous place such as by seeing news coverage of a new terrorist attack, they'll diverge in how they respond," says Griskevicius, assistant professor of marketing at the Carlson School. "The difference between the two people is that they had a different socioeconomic experience growing up."
According to Griskevicius, a prototypical example of the findings is a kid who grows up in a bad neighborhood. "If he hears gunshots down the street, this triggers a 'live fast and die young' psychology. He will feel the urge to get what he can while he can because the future is uncertain." This response is likely related to why poorer individuals purchase more lottery tickets.
The research also suggests that efforts using a "you never know what's going to happen tomorrow" approach to persuade at-risk kids to stay in school or avoid risky behaviors might be ineffective.
"Why should I go to school if I might not be around to see the benefits of my education?" asked Griskevicius. "Perhaps a more effective strategy would be to highlight the predictable aspects of the world. "It's a sense of the predictability of the world that's going to get people to save money, stay in school, be less risky and care about the future."
Co-authors of the study are Joshua Tybur (VU University Amsterdam) and Andrew Delton and Theresa Robertson (University of California, Santa Barbara).
About the Carlson School of Management
Established in 1919 and based in the Twin Cities of Minneapolis and St. Paul, the Carlson School of Management at the University of Minnesota is a recognized leader in business education and research. Its focus on experiential learning, international education and maintaining strong ties to the business community exemplify the school's commitment to excellence. More information about the school can be found at www.carlsonschool.umn.edu.