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Published January 2025 | Published
Journal Article Open

Determinants of Economic Risk Preferences Across Adolescence

Zhang, Yubing1 ORCID icon
Camerer, Colin F.2 ORCID icon
Tashjian, Sarah M.1
  • 1. ROR icon University of Melbourne
  • 2. ROR icon California Institute of Technology
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Abstract

This study examined economic risk preferences using a multidimensional approach in adolescents and young adults (N = 444, ages 13–27). Despite the two major theoretical approaches in adolescent economic risk‐taking—socioemotional theories and fuzzy‐trace theory—comparatively little is known about the role of incidental affective factors in economic risk‐taking. We tested six demographic and psychological determinants (age, gender, positive/negative affect, state anxiety, and indecision) on two economic risk decision tasks (loss aversion and skewness). Adolescents reported higher positive affect and lower negative affect than adults, but anxiety and indecision were age‐invariant. Women showed lower positive affect and higher negative affect, state anxiety, and indecision compared to men. We found women to be more loss‐averse; all other factors were not related to loss aversion. Adolescents were equally likely to accept symmetric and skewed gambles, whereas adults had more nuanced preferences. Adolescents also demonstrated a reduced bias toward negatively skewed risks compared to young adults, but both groups showed similar preferences for positively skewed and symmetric risks. These results support fuzzy‐trace theory's prediction of age‐related shifts from verbatim to gist representations: More verbatim processing during adolescence facilitated risk‐taking in negatively skewed risks, diverging from prospect theory. Positive affect shifted risk preference for adolescents and young adults in divergent directions—adolescents favored symmetrical risks more, while adults favored negatively skewed risks more. These patterns illustrate that adolescents and young adults in positive moods demonstrate risk preferences that are rare for their developmental stage, with potentially detrimental consequences depending on the choice at hand.

Copyright and License

© 2025 The Author(s). Journal of Behavioral Decision Making published by John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Acknowledgement

Adolescent participation of this research was supported by Character Lab and facilitated through the Character Lab Research Network, a consortium of schools across the country working collaboratively with scientists to advance scientific insights that help kids thrive. We acknowledge Aboriginal and Torres Strait Islander people of the unceded land on which we work, learn, and live. We pay respect to elders' past, present, and future and acknowledge the importance of indigenous knowledge in the Academy. Open access publishing facilitated by The University of Melbourne, as part of the Wiley - The University of Melbourne agreement via the Council of Australian University Librarians.

Funding

This study was funded by the Character Lab Research Network grant to Sarah M Tashjian.

Errata

Zhang, Y., Compare, Camerer, C. F., & Tashjian, S. M. (2025). Determinants of Economic Risk Preferences Across Adolescence. Journal of Behavioral Decision Making, 38(1), e70007. https://doi.org/10.1002/bdm.70007.

The funding statement for this article was missing. The below funding statement has been added to the article:

Open access publishing was facilitated by The University of Melbourne, as part of the Wiley–The University of Melbourne agreement via the Council of Australian University Librarians.

We apologize for this error.

Data Availability

All data, analysis code, and research materials are available at the Open Science Framework (https://osf.io/pcrs5/?view_only=dd95d97484a74942ae39985ed01baa58).

Supplemental Material

  • Table S1 Descriptive statistics and comparison of adolescent and adult samples.
  • Table S2. Correlations among all predictors and outcome measures for adolescents (top) and adults (bottom).
  • Table S3. Loss aversion score for each trial.
  • Figure S1. (a) Spaghetti plot showing individual choices for positive and negative affect.
  • Figure S2. (b) Associations between affect, anxiety, and indecision in adolescents and young adults respectively.
  • Table S4. Fit Statistics and comparisons with the baseline model for mixed-effects models.
  • Table S5. Mixed-effects logistic regression models predicting skewed risky choice.
  • Table S6. Mixed-effects logistic regression models predicting risky choice.
  • Table S7. Mixed-effects logistic regression models predicting risky choice.
  • Table S8. Mixed-effects logistic regression models predicting risky choice.

Files

Behavioral Decision Making - 2025 - Zhang - Determinants of Economic Risk Preferences Across Adolescence.pdf

Additional details

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