Skip to main content

View Diary: Morning Feature: Animal Spirits, Part I - Irrational Economic Actors (72 comments)

Comment Preferences

  •  Sometimes I think (8+ / 0-)

    the biggest economic factor is our tolerance for risk (and I'm not just talking about how it affects our stock portfolio). The difference between people on this is usually not based on much that's rational.

    I grew up in a family that had an extraordinarily high tolerance for risk - so much so that most of them spent their way into deep trouble.

    On the other hand, I can tolerate almost no risk in everyday financial affairs on both a personal and professional level (part of my job is to manage a $1.5 million budget at a non-profit).

    When I watch the "wheelers and dealers" operate in business and on Wall Street - it makes my skin crawl with the risks they take.

    I know it means I'll never be a rich tycoon, but at least I can sleep at night.

    And perhaps a little OT, but one of the best books I've ever read is The Soul of Money by Lynne Twist.

    A wise and inspiring exploration of the connection between money and leading a fulfilling life.This compelling and fundamentally liberating book shows us that examining our attitudes toward money—earning it, spending it, and giving it away—can offer surprising insight into our lives, our values, and the essence of prosperity... Through personal stories and practical advice, she demonstrates how we can replace feelings of scarcity, guilt, and burden with experiences of sufficiency, freedom, and purpose.

    •  Risk tolerance is complex. (6+ / 0-)

      I suspect Akerlof and Shiller would include several of the animal spirits in an analysis of someone's risk tolerance.  Confidence certainly applies, as does fairness; we're less prone to accept risk if we believe the game is rigged.  That brings in corruption and bad faith, and of course we estimate all of those based on the stories that surround us.  As we'll see Friday, Akerlof and Shiller make a good argument for why those elements combine to perpetuate poverty among minorities.

      Good morning! ::hugggggggggs::

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site