Willingness to take risks is a cornerstone of crucial economic decisions ranging from savings and employment to education and health. A new study finds that risk perception is deeply rooted in culture, particularly the lifestyle that our ancestors had led. For example, nomads’ descendants tend to have much riskier health behaviour, such as smoking and neglecting contraception.
The research by Angelina Nazarova uses historical ethnographic atlases combined with modern data on risk behaviour. It uses novel analytical techniques to document that differences between nomadic and sedentary groups can partially explain the current heterogeneity in risk aversion among individuals.
Throughout human history, people were always in motion. Some of our ancestors kept moving even after settled life became more appealing for development and growth. This separation in lifestyles promoted difference in risk behaviour, which was transmitted over generations along ethnic lines.
‘Sedentarism’ and its role in urbanisation have been widely explored in research, but little attention has been given to nomadism despite the large spread of nomadic populations. The last estimations comprise around 120 million of nomadic groups worldwide with nearly 90% from less developed areas in sub-Saharan and North Africa, West, South and Central Asia.
Nomads were carriers of civilisations for thousand years and pursued a distinctive form of living. But they were not always perceived as an independent cultural entity. Only within the last decades nomads became viewed not only as a separate social phenomenon, but as a fascinating form of human lifestyle.
Talking about nomads, one may instantly think of pastoralists, yet, other forms of nomadic lifestyle include military nomads, hunter-gatherers, tinkers and traders. Any nomad can be described as a member of community without fixed habitation, which moves from place to place. It has shaped nomadic living norms and created spatial and cultural distance from settled communities.
Nomadic lifestyle was associated with lower degree of risk aversion. Risky environments were seen as places to get higher stakes and capitalise on periodic good fortune, changing landscapes and fast adaptation provided knowledge to cope with systematic risks. Mobility became the most efficient strategy applied by nomads to generate highest possible returns while exploiting resources at the highest variance of risk.
The concept of risk is important in understanding economic behaviour. Risk preferences predict various dimensions of economic choices, including employment, investment, savings and schooling decisions. By bringing together the evidence of cultural persistence and origins of risk preferences, this study shows that risk heterogeneity can be traced back to ethnic origins and is partially explained by nomadic culture.
Using aggregated data from several ethnographic sources makes it possible to classify 1,309 ethnic groups as nomadic or sedentary (including other group characteristics: inheritance rules, beliefs, hierarchy, etc.), at time of the first European records. Manually matching this historical data with risk behaviour proxies from up-to-date surveys covers people living in around 450 regions within 50 to 80 countries.
To document the effect of nomadic lifestyle on risk, this study proposes a novel instrument specification exploiting initial bio-geographical conditions. Namely, the shortest distance between original location of ethnic group and the first wild animals' domestication location (animals used for long distance travelling).
Thus, ethnicities that were closer to the domestication sites were more likely to become nomadic. Using this distance as an instrument aims to identify the true correlation between nomadic lifestyle and risk proxies. Keeping time and region fixed, the results show that nomadic ancestry increases willingness to take risks and makes security of living surrounding less appealing.
Moreover, it shows that nomads’ descendants tend to have much riskier health behaviour such as smoking and neglecting contraception. Inclusion of a wide range of controls, e.g. income, education and geographical characteristics (rainfall, temperature, elevation, etc.) aims to isolate the effect of nomadic lifestyle.
Looking at different specifications across time and space, this study provides strong evidence that ancestral lifestyle can explain within differences in risk attitudes in terms of willingness to take risks, preference for security and risky health practices. It shows that risk heterogeneity can be traced back to ethnic origins emphasising the important role of ancestral culture in shaping risk perceptions.
ENDS
Angelina Nazarova
Email: angelina.nazarova2@unibo.it
Website: www.linkedin.com/in/angelina-nazarova
ResearchGate profile: https://www.researchgate.net/profile/Angelina_Nazarova2
Twitter: @ange_lina11