An Aging America Shies Away From Risk

Justin Fox:

have also been studies that purport to measure risk aversion by country. One recent attempt using Gallup polling data on happiness, by Nestor Gandelman of Universad ORT in Uruguay and Ruben Hernandez-Murillo of the Federal Reserve Bank of St. Louis, found the Dutch to be among the least risk-averse people on the planet (only Zimbabwe and Belarus scored lower), while U.S. risk aversion came out on the high side (among developed countries, only France, Belgium and Taiwan scored higher, as did nine developing countries).

I’m not sure how much stock to put in that result, which uses happiness data “to estimate how fast the marginal utility of income declines as income increases using an iterated maximum likelihood procedure, assuming a constant relative risk aversion utility function.” But there do seem to be a lot of indications that the famously footloose and risk-tolerant citizens of the U.S. are becoming less willing to take leaps into the unknown. Along with the entrepreneurship decline mentioned above, median job tenure has risen markedly since 2004 and the percentage of Americans who change residences each year has been in a long decline. As the New York Times reported last week, the “typical adult” in the U.S. now “lives only 18 miles from his or her mother.”