When people are stressed, they tend to make riskier decisions, a phenomenon that has intrigued scientists for years. A recent study by researchers at the University of Arkansas, published in the journal Psychoneuroendocrinology, sheds light on this behavior, revealing that a decrease in “loss aversion” is a significant factor behind this change. Loss aversion is the human tendency to be more affected by losses than equivalent gains, meaning the pain of losing $100 is greater than the joy of winning the same amount.
The study, led by Grant Shields, an assistant professor of psychological science, also highlights intriguing differences between genders. It found that stress affects men’s decision-making more significantly than women’s. Moreover, under stress, women tend to be better at predicting the outcomes of their decisions, while men have a stronger grasp of the consequences of those outcomes.
Understanding Loss Aversion and Risky Behavior
Loss aversion is a well-documented psychological principle that influences how individuals evaluate potential losses and gains. The University of Arkansas study involved 147 participants who were placed under stress and asked to make hypothetical financial decisions. Shields explained, “Financial risk is easy to assess because people have a pretty good idea about what they would do with their own money. My research was aimed at understanding the component processes that go into that calculus.”
The study utilized cumulative prospect theory, a model often used by behavioral economists to describe how people make decisions under risk. This theory suggests that decisions are influenced by four main factors: loss aversion, risk aversion, randomness—or stochasticity—in choices, and probability distortion, which is the tendency to overweight unlikely outcomes and underweight likely ones. For instance, probability distortion explains why lottery ticket buyers focus on the slim chance of winning rather than the high probability of losing.
Gender Differences in Decision-Making Under Stress
According to the study, stress impacts men and women differently. While men are generally more affected by stress in their decision-making processes, women under stress demonstrate a heightened ability to predict decision outcomes. Shields noted, “In my own life, if I’m stressed, I’ll wait to make a decision that could have potential loss implications.”
Co-authors Zach Gray, a doctoral student in psychology, and Trey Malone, a former agricultural economist at the University of Arkansas now at Purdue University, contributed to the research. Their findings suggest that understanding these gender differences could lead to more tailored approaches in managing stress and decision-making in various contexts.
The Evolutionary Perspective
While taking greater risks under stress might not be advisable in today’s world, Shields speculates there could be an evolutionary rationale behind this behavior. “If you’re an organism that’s being hunted or chased by another, then it makes sense to do stuff that you wouldn’t otherwise. Perhaps making a risky decision is better than staying put,” he explained.
Historically, risk-taking in stressful situations may have been advantageous for survival, allowing individuals to escape predators or secure scarce resources. This evolutionary perspective provides a broader context for understanding why stress might lead to riskier choices today.
Implications and Future Directions
The findings of this study have significant implications for fields ranging from psychology to economics. By understanding how stress influences decision-making, particularly with respect to gender differences, policymakers and mental health professionals can develop better strategies to help individuals manage stress and make more informed decisions.
Future research could explore how these findings apply to real-world scenarios, such as financial markets or emergency situations, where stress and decision-making are closely intertwined. Additionally, further studies could investigate how interventions aimed at reducing stress might alter decision-making patterns, potentially leading to more favorable outcomes.
As the world continues to grapple with stress-inducing challenges, from economic uncertainties to global pandemics, understanding the nuances of how stress affects decision-making will be crucial in navigating these complexities.
More information: Grant S. Shields et al, Acute stress differentially influences risky decision-making processes by sex: A hierarchical bayesian analysis, Psychoneuroendocrinology (2024). DOI: 10.1016/j.psyneuen.2024.107259
