Social learning and risk aversion

Social Learning and Risk Aversion

In his book Risk Savvy, Gerd Gigerenzer looks at risk aversion in the context of social learning and presents interesting ideas and results from studies of risk aversion and fear. He writes, “In risk research people are sometimes divided into two kinds of personalities: risk seeking and risk averse. But it is misleading to generalize a person as one or the other. … Social learning is the reason why people aren’t generally risk seeking or risk averse. They tend to fear whatever their peers fear, resulting in a patchwork of risks taken and avoided.”

 

I agree with Gigerenzer and I find it is normally helpful to look beyond standard dichotomies. We often categorize things into binaries as the example of risk averse or risk seeking demonstrates. The reality, I believe, is that far more things are situational and exist within spectrums. In general for most of our behaviors that we may want to categorize with a dichotomy, I would argue that we are often much more self-interested than we would like to admit and often driven by our present context to a greater extent than we normally realize. People are not good or evil, honest or dishonest, or even hardworking or lazy. People adjust to the needs of the moment, fitting what they believe is in their best interest at a given time with influence from a great deal of social determinants. Social learning and risk aversion helps us see that dichotomies often don’t stand up, and it reveals something interesting about who we are as individuals within a larger society.

 

People have a patchwork of things they fear and a patchwork of risks they are willing to accept. On the whole, we generally won’t accept a bet unless the payoff is twice the potential gamble (there is an expected value calculation we can do that I don’t want to dive into). However, we are not always rational and calculating in the risks and gambles we take. We are much more likely to die in a car crash than an airplane crash, yet few of have any hesitation when buckling our seat for the drive to work but likely feel some nervousness during takeoff on a short flight. We are not risk seeking if we are more willing to drive than fly (in fact it isn’t really appropriate to categorize this activity as either risk seeking or risk avoiding), we are simply responding to learned fears that have developed in our culture.

 

What this shows us is that we are creatures that respond to our environment, especially our social environments. We often think of ourselves as unique individuals, but the reality is that we are dependent on society and define ourselves based on the societies and groups we belong to. We learn from those around us, try to do what we understand to be in our best interest, and navigate a complicated course between societal expectations and our self-interest. Just as we can’t classify ourselves into imagined dichotomies, we cannot do so with others. Social learning and risk aversion give us a window into the complexity that we smooth over when we try to categorize ourselves or others into simple dichotomies.
The Results of Social Learning

The Results of Social Learning

The results of Social learning are not always positive. We learn a lot from our friends, our culture, and the people around us that we are not always aware of. We are greatly influenced by what we see others doing and believing, and this includes the things we learn and come to believe as true facts about the world. This is easily demonstrated by polling the opinions of people who get their news from traditional news outlets relative to people who get their news from fringe sources with political biases. But it is also true in spaces you would not expect.

 

To describe problems in social learning results, Gerd Gigerezner in Risk Savvy writes, “All in all, social learning leads to a paradoxical result. In France, Germany, Italy, the United Kingdom, and the United States, doctors’ beliefs about diet and health – such as taking vitamin supplements or exercising – more closely resemble those of the general public in their country than of doctors in other countries.”

 

When it comes to general knowledge and an ability to distinguish between accurate information and fads, trends, or beliefs without evidence, we like to imagine that we are smart and capable of identifying the truth. We like to believe that our beliefs are based on reality, that we have carefully considered the facts, and that we hold our beliefs for good reason. We won’t admit that we believe the things we do because others hold those same beliefs, but as the doctor example above indicates, that is often the case. The Dartmouth Atlas Project shows differences across the USA in treatments for certain conditions and rates of diagnosis for different conditions. Some of that may be genetic and reflect real health differences across the country, but some of the differences reflect different treatment approach beliefs by doctors trained in and practicing in different regions of the country.

 

Social learning results are good when they bring people together in support of democratic norms or help people understand that sitting on a couch all day and eating pizza for dinner every night are unhealthy behaviors. However, social learning results can be negative when doctor’s group around wasteful medical practices. The results of social learning can also just be random and strange, such as when people fall into fad diets or exercise programs that have no discernable health benefits or harms. What we should take away from Gigerenzer’s quote is that our knowledge is not always as rock solid and evidence based as we would believe. We should be honest with ourselves and make an effort to investigate whether our beliefs are based on real evidence or based on the people in our social groups who happen to hold the same beliefs. Perhaps our beliefs are still justifiable after strict scrutiny, but perhaps some beliefs can be let go when we see they are based on little more than the opinions and feelings of people around us.