This paper conducted research on the relationship between scarcity and risk-taking, as well as how this relationship is moderated by neuroticism. The study employed established questions and tasks...Show moreThis paper conducted research on the relationship between scarcity and risk-taking, as well as how this relationship is moderated by neuroticism. The study employed established questions and tasks used in peer-reviewed papers. The study differed between the concepts risk tolerance and risk preference. Multiple linear regression was used to analyse the data, which was performed in SPSS. After analysing the data it was concluded that scarcity and risk-taking have a positive relationship when tested with the risk-tolerance variable. For the risk preference variable this effect was only present if gender was controlled. Neuroticism also moderates the effect of financial scarcity on risk-taking for the risk-tolerance variable, but not the risk-preference variable. It was found that neuroticism weakens the relationship between scarcity and risk- taking. The study contributes to literature about the effect of neuroticism on the tendency to take or avoid risks, as well as the literature on how scarcity can increase the tendency to take risks in practical setting such as treating those with gambling addictions or tendency to overspend. The paper was limited by its risk preference measure, which did not properly simulate a risk-reward scenario, contrary to the risk tolerance measure.Show less
Lesser possession of financial resources greatly impacts livelihood and well-being. This state of scarcity manifests itself in individuals through alterations in cognitive functioning and decision...Show moreLesser possession of financial resources greatly impacts livelihood and well-being. This state of scarcity manifests itself in individuals through alterations in cognitive functioning and decision-making. This situation affects individual on different levels, depending on available resources and contextual means. This research is concerned about the role of personality traits, particularly impulsivity, on decision-making under situations of scarcity. Prior research has found that impulsivity affects decision-making, manifesting itself in rash action and impulsive behavior. Here, we apply these findings and discuss the degree of impulsivity and its moderating role in the relationship of financial scarcity and risk preference. This effect was investigated through a multiple-scaled questionnaire. One task, the lottery choice task, and two scales, the Psychological Inventory of Financial Scarcity (PIFS) and a shortened version of the Barratt Impulsivity Scale (BIS-15), were administered and utilized for the analysis. A total of 100 participants based in United Kingdom were involved in the questionnaire. The results yield no significance between impulsivity and the relationship of financial scarcity and risk preference. Future research may look deeper into cultural differences and biases that may be involved in the decision-making process, as well as looking into different instruments that measures the trait impulsivity itself.Show less
The subjective experience of financial scarcity has gained conceptual significance in the past decade, expanding from the objective perspective of poverty. Scarcity theory entails that having a...Show moreThe subjective experience of financial scarcity has gained conceptual significance in the past decade, expanding from the objective perspective of poverty. Scarcity theory entails that having a scarcity mindset leads to counterproductive economic decisions that cycle the poverty trap. Therefore, the consequences of decisions made under uncertainty require investigation. The following study hypothesized whether financial scarcity increases the willingness to take risks and whether the effect is mediated by a type of positivity bias known as the illusion of control. Risk has multiple dimensions and is measured mainly as risk preferences and risk tolerance in the study. Each variable is measured in a questionnaire to British participants through an online query called Prolific (N = 100). The preliminary findings of the study indicated a positive relationship between financial scarcity and risk preferences, considering the influence of age and gender, though not when analyzed independently. Significant positive associations were discovered between financial scarcity and both risk tolerance and the illusion of control, aligning with initial expectations. Although the current line of research did not directly explore a mediation effect, it remained plausible that a weak effect might exist. Future studies are encouraged to acknowledge the problem of risk heterogeneity and focus on factors such as cognitive ability and emotions on financial scarcity to comprehend the dynamics at play.Show less
