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Nature Is Weird  /  Psychology

Global warming is fundamentally changing human psychology by making people more likely to take dangerous risks.

A one-degree Celsius increase in lifetime temperature is linked to a significant drop in risk aversion across the globe. Climate change is usually discussed in terms of weather and economics, but its most profound impact may be on our decision-making. As the planet heats up, people are becoming statistically more prone to gambling and risky investments. This shift could lead to more volatile markets and more aggressive social behaviors as the climate continues to warm. It suggests that environmental stability is a key pillar of psychological caution.

Original Paper

Climate Change is Decreasing Risk Aversion Globally

Remy Levin, Meng Song

SSRN  ·  6690838

We estimate the effects of climate change on individual risk preferences, using global cross-sectional preference data linked to personal climate histories. We find that a 1 degree C increase in mean lifetime temperature is associated with a 0.318-unit decrease in relative risk aversion globally. We replicate the results in panel datasets from four countries containing longitudinal measures of risk preferences. Historical projections indicate that climate change between 1981 and 2026 decreased m