Who is more willing to take risks: Americans or Chinese? Stereotyping is what we do best. We instantly say Americans because we of course take more risks while the Chinese are more conservative. However, when asking both American and Chinese students to choose between a high-risk, high-return investment and a low-risk, lower-return investment, Chinese were all about taking a high-risk investment. They enjoy risk more than Americans.
We concluded in class that men are more willing to take risks. But who defines risk? We all have our own definition of risk. Risky to a woman could be riding a motorcycle. But to a guy, that is just an everyday thing. We may think that we as Americans are all about risk-taking when compared to Chinese, but this is only our definition of risk.
Situations change the idea of risk. When it came to investments, Americans do not want the risk. We want to be able to get an investment without risking much. The Chinese are up for more risk in investments. However when it comes to other situations, like riding a motorcycle, Americans may find themselves back at the top.
Do we consider ourselves conservative when it comes to business? Or are we more knowledgeable to know when to take these risks?
4 comments:
I agree with Janet that risk taking can be defined and looked at in many ways. I don't however agree with the assumption during our class discussion that men are always more apt to take more risks than women. For example, are is a man taking a risk when he asks a girl out? Maybe, but probably only as far as it might be a terrible date and a huge waste of time and money. Now look at it from the females point of view. Is she taking a risk by accepting and ultimately going out with that man? My answer to this is: women are the victims of date rapes almost exclusively compared to men. Women are the weaker sex or are they? They face risks and challenges everyday that men take for granted. They risk being raped and or murdered by a man every time they leave their house. Why are self defense classes taught to women and not men? Who knows? I guess as men we are supposed to know how to take care of someone that may attack us. My point is, that there are innumerable amounts of risky situations faced by both men and women everyday and that one cannot argue that men take more risks without first defining what risk is.
Do you define risk as uncontrollable? Or is risk more defined as something you can control? Again, defining risk is tough. When an insurance company puts men more risky than women it is because they put themselves in riskier situations more than women. If it was, as John West said, women would be paying more because they are more at risk. You cannot say women are riskier because they are more likely to be raped or attacked. These are situations that are uncontrollable.
Women take self defense classes because they are not nearly as strong as men. No matter what, a man will always win in a battle of strength. It is a fact. Because of this women are not riskier. Women are more at risk but not riskier.
Men put themselves in more risky situations then women do. If anything, both men and women should be susceptible of being murdered or attacked. But more women are because of strength. You cannot charge a woman more for insurance because she is more likely to be attacked.
Risk is something that everyone faces every day of their lives. Some choose to live life more adventurously than do others. The point of the rape scenario was just a brief snippit into what an individual may or may not face on a daily bases. Of course insurance companies can't charge higher premiums to women due to their sex and consequently littler muscles, but instead must come up with weights and measures that will benefit the majority of society. Men may take more risks than women and I simply believe it to be because of women having a motherly instinct to stick around in the world longer to bring about their posterity. That is not to say that men don't love life either, but we often don't think about the consequences that our actions may bring about.
There's a little heat here, but I really liked the arguments in this thread.
Also, this is going really strongly towards finance (which is a very acceptable digression because it is still connected back to managerial economics).
One thing that jumped out at me was the distinction between risk and uncertainty. Risk is the name given to variability or volatility that is measurable and quantifiable. Uncertainty is the name given to events that cannot be reasonably assigned probabilities. A lot of what underwriters do is trying to gather enough information to shift something from the class of uncertainty to that of risk.
The value of this is that risk can always be compensated for with a higher rate of return. And risk can be reduced through diversification. Those are two of the basic principles of finance.
As to the Chinese, I'm not surprised by this at all - the Chinese have a long cultural history of valuing gambling (I am always amused by the old Chinese women in Las Vegas playing table games ... while all the old "anglos" are playing slots). So, they're a little more steeped in it than you and I are.
As to men and women, the evaluation of risk is often a subjective thing. I think John and Janet both raise excellent points. It is reasonable to say that perhaps men and women would say the risk of riding a motorcycle is different. The same goes for the risk of assault/rape - men actually are more likely to be involved in violent assaults than women ... but still don't take self-defense classes.
So anyway, keep the thread going if you have new ideas. Here's a good one - is our society better off (in the sense that risk may be better diversified) by having two groups that have different preferences towards risk, and which get together in pairs?
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