Some Insight into Human Risk-Aversion

“We organics are driven by emotion instead of logic. It is our fatal flaw.” –Saren Arterius, Mass Effect

Why is it that so few young people are willing to assume the risk of starting their own business? There are several factors I believe contribute to this, which I plan to discuss in a later post. First, I’d like to explore a single over-arching theory that strikes at the heart of human risk-aversion.

Humans are unique among organic beings because we have the ability to plan for the distant future. Many mammals can plan for cyclical events, such as the way squirrels gather food for winter. However, there is no evidence that any non-human species, including primates, can use cognitive reasoning (rather than instinct) to make meaningful long-term plans. Humans can imagine themselves in 5, 10, or even 30 years into the future, and these long-term goals influence our decisions in the present.

It would seem reasonable that our ability to understand how our decisions affect our long-term goals would lead to better decision-making. However, it seems to be quite the opposite. The reason for this, I believe, is that human decision-making is more often ruled by emotion rather than logic. Furthermore, the fear of pain weighs more heavily on us than the prospect of happiness.

To illustrate, lets delve into a few examples. Are college students motivated to study hard for tests by the prospect of satisfaction for receiving a high score? Or do they study to prevent a bad grade that could jeopardize their chances of getting a job or getting into graduate school? Do most adults go to work every day for self-satisfaction and financial independence? Or do they do so because if they don’t, they can’t pay their rent, feed their kids, or live a life they’ve become accustomed to? Why do we try to eat healthfully? Brush our teeth every morning? Dress the way we do? The point here, is that there are two ways of looking at the same scenario—in the proverbial glass empty, glass full sort of way. One side cannot exist without the other. But which side drives our actions? Pain is a far more powerful emotion than happiness, and thus rules our decision-making most of the time.

But why does this lead to bad decision-making? Our ability to plan and imagine the future leads us to imagine painful scenarios we wish to avoid. This in turn, shapes our decisions to avoid these scenarios, even at the cost of potentially greater future benefit. This also leads us to usually take the safer route instead of the path less-travelled, as appealing as the latter may seem, because the unknown holds the possibility of pain. We will take the steady job, even if it’s more mundane and offers virtually no upside. We will not ask that girl/boy we like out on a date because the fear or rejection outweighs the benefits of success.

I am not advocating that people stop studying, working, and brushing their teeth, by any means. However, we must be aware that our tendency to avoid pain forces us to miss out on some great opportunities. We go through life avoiding miserable scenarios in hopes that our ultimate goals will somehow achieve themselves. Sometimes, we have to assume the risk of pain in order to reap greater benefits later on.