What types of people are likely to be risk averse, to fear the vagaries of lady luck? Curious, I looked up the personality literature:
- By MBTI personality types, risk tolerance is negatively related with Introversion, Sensing, and Judging; and positively associated with Extroversion, Intuitive, and Perceiving types.
- By NEO personality types, risk tolerance is negatively associated with “Conscientiousness Factor (Overall) and the six Agreeableness Subscales (all) – C1: Competence, C2: Order, C3: Dutifulness, C4: achievement.”
Interestingly, it seems like the more “stoic” personality characteristics are related to risk aversion. Yet if one is relatively immune to the vagaries of lady lucky, (all else equal) shouldn’t one be more risk tolerant? Is there no moral hazard for emotional insurance? Indeed, who could rightfully claim to be “stoic” to loss and then constantly try to avoid it?
In his latest Umlaut piece, Adam takes exception with the Epicurean and Stoic greats, arguing against the total mastery of luck:
The philosophic quest to banish luck has largely been a failure, though it has given us many useful tools along the way. But taken at their word schools such as stoicism practically ask us to cut off our limbs to avoid the risk of lady luck taking them from us.
From the POV of entrepreneurial capitalism, extroversion, restlessness and leaps of faith are all virtues. But the stoics weren’t capitalists. As Adam alludes, they generally shunned what we would today call conspicuous consumption. The stoic Cato, for example, would intentionally wear the opposite of what was fashionable, an F.U. to the proverbial “Jones” he decided weren’t worth keeping up with. How paradoxical — to embrace the unfashionable to dodge the risk of appearing out of fashion?
Perhaps the Stoic’s apparent self-spiting was really an anti-fragile sensitivity to tail risks — cutting off a limb to save the head — that only seems like a reductio ad absurdum because of the narrow time frame. If accurate, it should at very least change the way one invests.
I admire the stoics, but like Adam, have tried to “unbundle” their wisdom. In spite of my efforts, stoicism and asceticism are a packaged deal.
Partly it’s the failure of my reason to master my passions given the allure of prestige and rewards. Partly its a problem of collective action — few of my own risks are statistically independent. I feel like the world is on a roller coaster increasing in speed until it collapses, but my only choices are to ride it or stand in its shadow: Might as well enjoy the ride. And so a tincture of risk tolerance inevitably leads to a gallon of reward tolerance. A taste of the fashionable, and from there, a hedonic treadmill that is pressing our luck.