Risk Orientation, Risk Exposure, and Policy Opinions: The Case of Free Trade

Ehrlich, Sean D.; Maestas, Cherie D.

doi:10.1111/j.1467-9221.2010.00774.x

Cited by 82 publications

(51 citation statements)

References 59 publications

(93 reference statements)

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“…Kam () shows that Americans who are more risk taking are more likely to participate in political life. These studies are more in line with the assumption that risk attitude is largely a stable personality trait (see also Ehrlich & Maestas, ) and not something that is shaped by the context in which a decision is made (e.g., whether an outcome is a loss or a gain) . However, general risk attitudes may interact with context effects.…”

Section: Existing Studies’ On Risky Decision‐making By Politicianssupporting

confidence: 68%

Do Politicians Take Risks Like the Rest of Us? An Experimental Test of Prospect Theory Under MPs

Linde

Vis

2016

Political Psychology

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Political psychologists have been quick to use prospect theory in their work, realizing its potential for explaining decisions under risk. Applying prospect theory to political decision-making is not without problems, though, and here we address two of these: (1) Does prospect theory actually apply to political decision-makers, or are politicians unlike the rest of us? (2) Which dimension do politicians use as their reference point when there are multiple dimensions (e.g., votes and policy)? We address both problems in an experiment with a unique sample of Dutch members of parliament as participants. We use well-known (incentivized) decision situations and newly developed hypothetical political decision-making scenarios. Our results indicate that politicians' deviate from expected utility theory in the direction predicted by prospect theory but that these deviations are somewhat smaller than those of other people. Votes appear to be a more important determinant of politicians' reference point than is policy.KEY WORDS: prospect theory, reflection effect, probability weighting, politicians, experiment, elite decision-making Over the past decades, psychologists and behavioral economists have produced an extensive body of research demonstrating that people deviate systematically from the predictions of expected utility theory by falling prey to decision-making biases (see, e.g., Camerer, 2003;Starmer, 2000). These findings are relevant for political scientists, since expected utility theory is the basis of rational choice-still a, or even the, dominant approach in many fields of political science (e.g., Bueno de Mesquita, 1981;Mearsheimer, 2001; for a recent discussion on the usefulness of rational choice theory, see Hug, 2014).Two of the most prominent deviations from expected utility theory are probability weighting and the reflection effect (Tversky & Kahneman, 1981). Probability weighting implies that people do not treat probabilities linearly and are very sensitive to the possibility of ensuring a sure outcome. The reflection effect means that peoples' risk attitudes are influenced by whether outcomes are framed as gains or losses: for losses they are generally risk taking, but for gains they are risk averse. Prospect theory (Kahneman & Tversky, 1979;Tversky & Kahneman, 1992) is a theory of decision-making under risk and uncertainty that incorporates the body of research demonstrating deviations from expected utility theory. The choice regularities incorporated in prospect theory have been confirmed 350 Main Street, Malden, MA 02148, USA, 9600 Garsington Road, Oxford, OX4 2DQ, and PO Box 378 Carlton South, 3053 Victoria, Australia This is an open access article under the terms of the Creative Commons Attribution NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.Political Psychology, Vol. 38, No. 1, 2017 doi: 10.1111 bs_bs_banner by numerous studies (Starmer, 2000), mostly using student samp...

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Section: Existing Studies’ On Risky Decision‐making By Politicianssupporting

confidence: 68%

Do Politicians Take Risks Like the Rest of Us? An Experimental Test of Prospect Theory Under MPs

Linde

Vis

2016

Political Psychology

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“…People who feel anxious perceive higher levels of risk and overweigh even small risks (Slovic & Peters, ; Slovic et al, ), leading to preferences for risk‐averting policies (Albertsen & Gadarian, ; Huddy, Feldman, Taber, & Lahav, ; Merolla & Zechmeister, ). In the mass public, risk perceptions and associated anxiety have been found to influence trust in and support of leaders (Albertson & Gadarian, ; Merolla & Zeichmeister, ), issue relevance judgments (Miller, ), preferences for protective policies (Albertson & Gadarian, ; Atkeson and Maestas, ; Ehrlich & Maestas, ; Huddy et al, ), support for policy change (Boldero & Higgins, ), and willingness to pay for risk‐averting efforts (Hunter et al, ; Mumpower, Shi, Stoutenborough, & Vedlitz, ). In short, the affective perception of risk puts considerable pressure on politicians and policy subsystems to act to reduce threat (e.g., Breyer, ; Wildavsky & Dake, ).…”

Section: Risk Perception Centralization and The Mediating Role Of Umentioning

confidence: 99%

Fearing Food: The Influence of Risk Perceptions on Public Preferences for Uniform and Centralized Risk Regulation

Maestas¹,

Chattopadhyay²,

Leland³

et al. 2018

Policy Studies Journal

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Public opinion features prominently in policy research because it sets bounds on the definition of policy problems and acceptable policy solutions. We contend that public opinion is also important for setting bounds on the level of government at which policy hazards are regulated by shaping preferences for uniformity of regulation and, relatedly, preferences for centralization. We offer a theoretical argument for why risk creates pressures for uniform standards and examine the extent to which preferences for uniformity and centralization are the product of fairly stable individual-level predispositions (e.g. partisanship and ideology) versus more fluid attitudes like perceptions of risk, which vary in response to crises, new information, and issue framing. We test our argument using survey data in the policy domain of food safety and find that individuals who anticipate greater risk from food-borne illness prefer more uniform food safety regulation, which translates into preferences for federal-level policymaking. Our results imply that contextual circumstances and strategic communications that influence risk perceptions can create not only generalized public demand for more regulatory policy but specific demand for uniform, centralized regulation.

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“… While this paper is among the early studies of the status quo bias for trade policy preferences, risk aversion analyses have not been limited to economics. In the political psychology field, for example, Ehrlich and Maestas () find that the probability of supporting free trade only drops for risk‐averters as job threat rises, based on a survey in the USA. Kam and Simas () report that an individual's risk acceptance predicts their policy preference, regardless of how outcomes are framed based on a survey on 761 people.…”

mentioning

confidence: 99%

Individual Characteristics, Behavioral Biases, and Trade Policy Preferences: Evidence from a Survey in Japan

Tomiura

Ito

Mukunoki

et al. 2016

Rev International Economics

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Import liberalization is one of the most actively debated issues in trade policy. This paper examines how trade policy preferences are related to individual characteristics based on a survey in Japan. Among 10,000 surveyed individuals, people working in non‐agricultural sectors, those working in managerial occupations, or those above retirement age tend to favor freer imports. This paper also finds that people who are influenced by the status quo bias are likely to oppose import liberalization even after controlling for each individual's various characteristics, suggesting that neither income compensation nor insurance schemes are sufficient for expanding support for free trade.

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Risk Orientation, Risk Exposure, and Policy Opinions: The Case of Free Trade

Cited by 82 publications

References 59 publications

Do Politicians Take Risks Like the Rest of Us? An Experimental Test of Prospect Theory Under MPs

Do Politicians Take Risks Like the Rest of Us? An Experimental Test of Prospect Theory Under MPs

Fearing Food: The Influence of Risk Perceptions on Public Preferences for Uniform and Centralized Risk Regulation

Individual Characteristics, Behavioral Biases, and Trade Policy Preferences: Evidence from a Survey in Japan

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