Friday, 20 February 2015

The vanishing ability to take risks

These graphs are taken from an excellent new working paper [pdf] by Stephanie Schurer that analyses risk attitudes on a very large - 135K people - German sample and can thus make do with the "life experience" generational problem (e.g. people that came of age during an economic downturn tend to be more risk-averse) that plagues smaller samples. So, basically, we now have a fairly clear idea of what people's appetite for risk is throughout their adult life, and, in view of present demographic trends, there is nothing here for anyone to celebrate.

The obvious consequence is that the greying of rich, western societies is going to lead to a diminishing ability to innovate and disrupt, and thus to probably fewer productivity gains (*).

But wait, the worst is to come: there is little hope of being rescued in that respect by emerging economies, as risk appetency is also hugely correlated with both income and education.

Secular stagnation, here we come?

(*) There have been numerous papers these last few years purporting to show that there is no empirical link between a workforce's age and its productivity, which I find somewhat, er, baffling.

Monday, 2 February 2015

The worrying feminization of psychology

I have been reading a social psychology textbook recently and, when I last opened Goodreads, this is what greeted me:

Weird, right? OK, so maybe their algorithm is not very smart, but it most probably is not lying either: the data must be strongly pointing to a hefty correlation between reading psychology and, er, knitting. And, sure, as women nowadays routinely outnumber men 3 to 1 among psychology graduates (click to enlarge),

in fact this should not even be considered as surprising.

Now, I am a strong believer in diversity. On financial markets, for instance, I have seen culturally homogeneous banks run into trouble like clockwork. The dangers caused by groupthink should never be underestimated - and especially so in a soft science like psychology, where well-established, sobering facts are not that numerous and where quite a few of the results taught in undergraduate textbooks remain controversial.

So I do find this slightly worrying.