Survival and Surplus Mindsets: A Resource Management Perspective on the Relationship between Early Life Socioeconomic Status and Lifelong Risk Preferences

Abstract

There is an evolving debate surrounding how individual differences in risk preferences can be mapped to socioeconomic factors of early, formative periods of life. However, the existing frameworks make conflicting predictions regarding whether more privileged upbringings foster or inhibit willingness to take risks and in which contexts early-developed risk preferences manifest in adult life. We introduce a new perspective that reconciles these conflicts. Our theoretical account proposes that resource management mindsets forged by different early life socioeconomic conditions carry distinct baseline risk preferences, which guide risk-taking in mundane contexts of adult life, and distinct threat responses, which guide risk-taking in particularly stressful contexts, like economic recessions and global pandemics. Our framework helps clarify poorly understood risk-taking patterns documented in empirical research, sheds light on new research avenues, and provides a concise set of predictions to inform decision-making by stakeholders addressing inequality and risk management in society.

Keywords: Risk preferences, early life, childhood, socioeconomic status, inequality, life history theory, resource availability