Effect Of Economic Insecurity On Risk Decision Making

Economic insecurity refers to a state of uncertainty and unpredictability regarding one’s financial well-being.Individuals in the state of economic insecurity may be dissatisfied with their financial situation.Maybe they also worry about the future economic situation.To deal with such circumstances,individuals might take certain actions.This study aims at investigating the effects of economic insecurity on the risk decision-making through conducting three experiments.And this study provide reference for alleviating the negative impacts of economic insecurity.In experiment 1,the economic insecurity scale was used to distinguish individuals with different economic insecurity levels.And we mainly investigated the risk decision differences of individuals with different economic insecurity levels.According to results,for the high-income group,the risk preference of individuals with high economic insecurity was significantly higher than that of individuals with low economic insecurity.While for the low-income group,there were no significant differences between the high economic insecurity group and the low economic insecurity group.In order to further verify the causal relationship between economic insecurity and risky decision-making,in the experiment 2,we manipulated individual economic insecurity in the lab.Results showed that,for the high-income group,the risk preference of individuals with high economic insecurity was significantly higher than that of individuals with low economic insecurity.While for the low-income group,there were no significant differences between the high and low economic insecurity.Previous studies have shown that individual risk decisions are influenced by a lossbenefit framework,and that economic insecurity may increase individual loss aversion.Therefore,in experiment 3,we further explored the role of the benefit-loss framework in moderating the impact of economic insecurity on risky decision-making.The results showed that,in the high-income group,the risk preferences of individuals with high economic insecurity in the loss framework showed more risk preferences than those in the benefit frame.While in the low economic insecurity group,individuals were not affected by the lossbenefit framework.In low-income groups,individual risk preferences were not affected by the economic insecurity levels and the loss-benefit framework.These results suggested that economic insecurity influences individuals’ risk decisions and that this process was mediated by their income level as well as their loss-benefit framework.In conclusion,economic insecurity may increase the risk preferences of high-income individuals.And this effect is stronger under the loss framework.However,economic insecurity has no effect on the risk preferences of low-income people.