Risk Relationships Across The Pond

Last week’s Economist has an article that compares the risk preferences of Americans versus Europeans:

ANYBODY who dabbles in transatlantic affairs has come across one giant stereotype: Americans admire risk-takers, whereas Europeans (at least in the rich, stable parts of the continent) are instinctively risk-averse, expecting the state to shield them from all sorts of dangers, including their own folly. Move a bit farther east to the ex-communist world, especially Russia, and you enter a place where things seem to have gone from one extreme to another: from an all-demanding, all-protective state to a free-for-all where life is full of deadly dangers, about which even the prudent can’t do very much. [link]

What is interesting about this article is that it uses the implementation and regulation of rules (read: bureaucracy) to measure the riskiness of a particular continent. For instance,

Where America and Europe may differ is in the main cause of their risk-reducing zeal. America’s proverbially litigious culture makes all players in the public arena, be they government agencies, companies or schools, intensely keen to delimit their responsibilities, and within those limits to minimise the risk of liability. To many Europeans, an “ambulance-chasing” legal environment, which sees every mishap as an opportunity for a lawsuit, is an unwelcome pathology that has spread in their direction from the United States.

But Europe has pathologies of its own, especially that of the over-ambitious bureaucracy, such as the European Union agencies that regulate food and the environment. In the wilder fringes of the EU there are citizens who understandably trust the Brussels mandarins to monitor their beaches and air more fairly than their own country’s bureaucrats ever would. So regulatory zeal becomes a source of legitimacy for EU institutions that badly need it. [link]

This would be a good start for a term paper – examining risk preferences across countries or continents or cultures using a factor (e.g., bureaucracy, risk premia) that is common to all parties involved, but is implemented differently, but yet measurable and/or quantifiable in some way).

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