e-book

The economics of risk

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This sign is posted at the horse stables where my two younger daughters ride horses on Saturday mornings. The sign communicates at least two distinct messages to its reader. First, riding horses is a risky activity. Even though it is a small percentage of riders overall, a number do get injured in horse-riding incidents with the possibility of even sustaining a serious or life-threatening injury. Second, when you decide to ride a horse at these stables, you take on and assume this risk; that is, the stable owner is not in any way liable for an injury that you may incur while participating in equine activities.

Riding horses is just one of almost countless situations in life in which you encounter risk—where you encounter the chance of injury, damage, loss, or of making a dangerous choice. Other examples include the risk of losing your job, the risk of contracting some debilitating disease, the chance of getting in an automobile accident on the way to the shopping mall, and the risk of being struck by lightning in a summer thunderstorm. Risk is all around us and affects us all. No one can escape from its clutches or attain perfect immunity to it. You may decide to not acquire the additional risk of riding a horse by not engaging in that activity, but one cannot so easily avoid the risk of getting cancer or the risk of being hit by a car while crossing the street on the way to school.

Risk is something that most of us dislike and try to avoid. Economists and other researchers have studied risk and have obtained considerable amounts of evidence that indicate that people are generally “risk averse” in their attitude towards risk. This means that, everything else held constant, people choose the less risky alternative and they will take measures to reduce or shift the risk to others when feasible. Purchasing health, life, or automobile insurance is one way to do this. Diversifying your investment portfolio by investing in different kinds of stocks, bonds, and money market securities is another. These measures help reduce the amount of risk that we must face to a more comfortable and manageable level. But we cannot completely insulate ourselves from the many risks that one can come across.

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Ketersediaan

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Informasi Detail

Judul Seri

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No. Panggil

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Penerbit

Michigan : W.E.Upjohn Institute for Employment Research., 2003

Deskripsi Fisik

HB615.E3387 - 368—dc22

Bahasa

English

ISBN/ISSN

0-88099-268-9

Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

1st. ed.

Subjek

EKONOMI

Info Detail Spesifik

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Pernyataan Tanggungjawab

agus

Versi lain/terkait

Lampiran Berkas

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