[PEN-L:11819] Risk and Unequal Opportunity under capitalism

[Nathan Newman <newman@xxxxxxxxxxxxxxxxxxx>]

I just finished off  Peter Bernstein's AGAINST THE GODS: THE REMARKABLE
STORY OF RISK and found the book's history of risk analysis fascinating
and, most compellingly, found some of the most recent studies he documents
around the psychology of risk extremely pointed in showing how risk itself
has a class divided nature.

Much of present policy prescriptions, from stock market investments a s a
replacement for social security to the level of indebtedness required of
students as a risk of attending college, point to the average return on
such risks, from the higher investment returns of the market to the higher
wages gained from attending college.

However, Bernstein documents a number of psychological studies that (not
surprisingly) show that those with little become extremely risk adverse
even when facing the same odds as those with more income (better than the
real life situation where racism and networking privileges give upper
income folks an advantage in most risk situations.)  The result will be,
as Bernstein writes, that in any risk situation, "people who start out
with money in their pockets will choose the gamble, while people who start
out with empty pockets will reject the gamble."

What this implies is that any social policy geared to rewarding risk will
generally direct the incentives involved in social resources toward those
with income.

I am curious what progressive policy folks or economists have explored
this risk bias against the poor in their analysis of concrete social
policy.  It seems especially relevant in education policy as students are
looking at tens of thousands of dollars of debt as a normal price of
college education.

Any cites?

Nathan Newman
UC-Berkeley