Inequality and Risk-Taking

Abstract

Inequality has been associated with risk-taking at the societal level. However, this relationship has not been directly investigated at the individual level. Risk-sensitivity theory predicts that decision makers should increase risk-taking in situations of disparity between one’s present state and desired state. Economic inequality creates such a disparity. In two experiments, we examined whether imposed economic inequality affects risk-taking. In Experiment 1, we examined whether victims of inequality engaged in greater risk-taking compared to beneficiaries of inequality and those not experiencing inequality. In Experiment 2, we examined whether ameliorating inequality for victims reduced risk-taking. In both experiments, victims of inequality engaged in greater risk-taking compared to beneficiaries of inequality and those not experiencing inequality. Among victims, amelioration of inequality contributed to decreased risk-taking. These findings provide further evidence in support of risk-sensitivity theory and suggest that reductions in economic inequality may lead to lower risk-taking.