NCPA - National Center for Policy Analysis

Wealth Allows More Risk Taking

August 3, 1999

From job-hopping to Internet investing to mountain-climbing, Americans are showing their willingness to take on greater risks, according to some social observers.

Consider these indicators:

  • The proportion of employees who voluntarily left their last jobs in an effort to improve their careers is at 14.5 percent -- the highest level since the late 1980s.
  • At Harvard Business School, 30 percent of this year's graduates -- who in earlier years would probably have opted for a safe job in a major corporation -- are electing to join high-tech or venture-capital outfits, up from 12 percent in 1995.
  • At the beginning of the decade, individuals had 50 percent of their financial assets in stocks and stock funds -- compared to 73 percent today.
  • University studies have revealed that the more money people have, the more willing they are to take risks with it.

That turns on its head the long-held assumption that wealth generates risk-aversion.

So experts link today's prosperity and countless examples of people who became overnight millionaires through Internet stock trading with the tendency to embrace greater risk. Moreover, the enormous growth in financial wealth has created its own safety net -- encouraging millions of Americans to take greater gambles.

Source: Bernard Wysocki Jr., "How Life on the Edge Became Mainstream in Today's America," Wall Street Journal, August 3, 1999.


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