Personal Risk Tolerance Shapes How Societies Change, Adapt, and Divide

Personal attitudes toward risk do far more than influence individual life choices. According to new research from the Santa Fe Institute and the University of California, Merced, risk tolerance plays a central role in how societies evolve, how cultures adapt to change, and even how political polarization takes shape over generations. The study offers a detailed model showing how wealth, environment, and learning strategies interact to shape whether people become risk-takers or risk-avoiders — and how those tendencies persist long after major economic or social shocks.

The research, published in Psychological Review in 2025, was led by Alejandro Pérez Velilla, a Ph.D. student at UC Merced, along with cognitive scientist Paul Smaldino and collaborators. Rather than relying on surveys or short-term experiments, the team developed a computational model to examine how individuals learn about risk throughout their lives and how those learning patterns are passed down culturally across generations.

At the heart of the work is a simple but powerful idea: how much risk a person is willing to take depends heavily on what they can afford to lose.

Risk Tolerance Depends on Resources, Not Personality Alone

Popular culture often portrays risk-taking as a sign of confidence or boldness. Biographer Walter Isaacson famously described Elon Musk playing poker by going “all in” on every hand, using the anecdote to highlight Musk’s fearless approach to life and business. But as the researchers point out, this strategy only works when someone has a massive safety net. For most people, consistently risking everything would be financially disastrous.

The study argues that risk tolerance is deeply shaped by access to resources, particularly what the authors call a “wealth buffer.” A wealth buffer refers to extra resources — money, social support, stability — that allow people to absorb losses without catastrophic consequences. Individuals with such buffers can afford to experiment, fail, and try again. Those without them cannot.

This difference doesn’t just affect personal decisions. Over time, it influences how entire communities learn, behave, and respond to change.

How the Model Works Across a Lifetime

The model developed by the researchers simulates a person’s journey from childhood into adulthood. Early in life, individuals are largely shielded from the consequences of risky behavior. Parents, caregivers, and institutions absorb much of the cost when children make mistakes. During this stage, people tend to learn about risk indirectly, by observing others and listening to elders.

As individuals age, that protection fades. Choices begin to carry real consequences — financial loss, social penalties, or long-term setbacks. People then rely more heavily on their own experiences, adjusting their behavior based on what worked and what failed.

Crucially, the model also incorporates social learning, meaning individuals learn not only from personal experience but also from peers, mentors, and community traditions. Over generations, these learning strategies become tuned to the environment in which people live.

Why Wealth Inequality Reinforces Risk Aversion

One of the most striking findings is how economic inequality amplifies differences in risk behavior. In environments where resources are scarce and losses are severe, conservative learning strategies dominate. People rely heavily on tradition, inherited knowledge, and time-tested behaviors that minimize danger.

These strategies are highly effective at avoiding disaster, but they come at a cost. They limit experimentation and slow adaptation when conditions improve or when rapid change is required. According to the model, this creates a feedback loop where communities facing long-term scarcity become increasingly risk-averse over generations.

In contrast, wealthier communities with stronger safety nets encourage exploratory learning. People are more willing to try new approaches, take chances, and abandon outdated norms. Innovation thrives under these conditions, but so does inequality, as the benefits of risk-taking are unevenly distributed.

Risk, Politics, and Polarization

The research also offers insight into modern political polarization, particularly in the United States. The model predicts that people living in economically vulnerable regions are more sensitive to perceived risks, whether those risks involve cultural change, economic shifts, or social transformation.

Political actors can exploit this sensitivity by framing change itself as dangerous. When people already feel they have little room for error, messages emphasizing instability and threat become especially persuasive. This helps explain why political divides often align closely with economic inequality.

The model suggests that polarization is not just ideological but structural — rooted in long-standing differences in how communities experience and manage risk.

Why Risk Attitudes Persist Across Generations

Another key finding is that risk tolerance is culturally inherited, not just individually learned. When wealth buffers are low and stakes are high, parents and elders strongly influence how younger generations perceive risk. Cautious attitudes become ingrained cultural norms, passed down long after the original dangers have faded.

This explains why societies that experienced major disruptions — such as wars, recessions, or famines — may remain resistant to change decades later. Even when new policies or technologies could improve conditions, deeply rooted risk aversion can act as a barrier.

According to the researchers, this persistence helps explain why some cultures struggle to adapt quickly to rapid technological or social shifts, while others respond more flexibly.

Culture, Resilience, and Adaptation

The study emphasizes that risk tolerance, culture, and resilience are tightly connected. Conservative strategies can be lifesaving in dangerous environments, but they can also become obstacles when flexibility is required. Exploratory strategies drive innovation but may expose individuals to greater volatility and failure.

There is no universally “correct” level of risk tolerance. Instead, the optimal balance depends on environmental stability, resource availability, and social safety nets. The problem arises when conditions change faster than cultural learning can keep up.

Additional Context: What Psychology Says About Risk Behavior

Beyond this specific model, decades of research in psychology and economics support the idea that people evaluate risk relative to their perceived security. Behavioral economics shows that individuals facing scarcity tend to focus on loss avoidance rather than potential gains. Neuroscience research also indicates that chronic stress and uncertainty can narrow decision-making, pushing people toward safer, more familiar options.

Cultural evolution studies further demonstrate that traditions often serve as risk-management tools, preserving behaviors that helped communities survive past threats. The new study builds on this work by linking these ideas into a single framework that spans individual development and generational change.

Why This Research Matters

This research provides a clearer picture of why inequality is so difficult to reverse, why political divisions deepen over time, and why policy reforms often meet resistance even when they promise improvement. It shows that risk tolerance is not simply about courage or fear, but about structural conditions that shape how people learn and adapt.

By connecting personal experience, cultural transmission, and economic context, the study offers a powerful lens for understanding social stability and social change. It also suggests that reducing inequality and strengthening safety nets may do more than improve material well-being — they may fundamentally alter how societies approach risk, innovation, and the future.

Research paper: https://doi.org/10.1037/rev0000599