Risk-Taking--Smart or Self-Assured?

Virginia Postrel in today's Times, Would You Take the Bird in the Hand, or a 75% Chance at the Two in the Bush? reports on research into risk-taking, and includes a 3-question quiz for self-assessment. The results seem to say that people, especially male people, who are smart are willing to take greater risks.

"'Even when it actually hurts you on average to take the gamble, the smart people, the high-scoring people, actually like it more,' Professor Frederick said in an interview. Almost a third of high scorers preferred a 1 percent chance of $5,000 to a sure $60.

They are also more patient, particularly when the difference, and the implied interest rate, is large. Choosing $3,400 this month over $3,800 next month implies an annual discount rate of 280 percent. Yet only 35 percent of low scorers — those who missed every question — said they would wait, while 60 percent of high scorers preferred the later, bigger payoff.

Men and women also show different results. 'Expressed loosely,' he writes, 'being smart makes women patient and makes men take more risks.'

High-scoring women show slightly more willingness to wait than high-scoring men, while the differences in risk-taking are much larger. High-scoring women are about as willing to gamble as low-scoring men, while low-scoring women are even more risk-averse"

I have my doubts. [Totally unconnected to the fact I only got 2 of the 3 questions right.] I'd like to see research on self-confidence: do people who think they aced the quiz accept greater risks versus those who weren't sure. That seems to me more likely to be the key variable. Divide the universe into four sets: smart and know it; dullards who think they're smart; dullards who know it; and smart who are modest. The second group qualify for the Darwin Awards.