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Concept: Financial risk

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Risk taking is central to human activity. Consequently, it lies at the focal point of behavioral sciences such as neuroscience, economics, and finance. Many influential models from these sciences assume that financial risk preferences form a stable trait. Is this assumption justified and, if not, what causes the appetite for risk to fluctuate? We have previously found that traders experience a sustained increase in the stress hormone cortisol when the amount of uncertainty, in the form of market volatility, increases. Here we ask whether these elevated cortisol levels shift risk preferences. Using a double-blind, placebo-controlled, cross-over protocol we raised cortisol levels in volunteers over 8 d to the same extent previously observed in traders. We then tested for the utility and probability weighting functions underlying their risk taking and found that participants became more risk-averse. We also observed that the weighting of probabilities became more distorted among men relative to women. These results suggest that risk preferences are highly dynamic. Specifically, the stress response calibrates risk taking to our circumstances, reducing it in times of prolonged uncertainty, such as a financial crisis. Physiology-induced shifts in risk preferences may thus be an underappreciated cause of market instability.

Concepts: Financial risk, Psychology, Decision theory, Utility, Economics, Finance, Cortisol, Risk

24

In 2003, Turkey embarked on ambitious health system reform to overcome major inequities in health outcomes and to protect all citizens against financial risk. Within 10 years, it had achieved universal health coverage and notable improvements in outcomes and equity.

Concepts: Medicine, Financial risk, Finance, Risk, Universal health care

8

Delay discounting, as a behavioral measure of impulsive choice, is strongly related to substance abuse and other risky behaviors. Therefore, effective techniques that alter delay discounting are of great interest. We explored the ability of a semester long financial education course to change delay discounting. Participants were recruited from a financial education course (n = 237) and an abnormal psychology course (n = 80). Both groups completed a delay-discounting task for $100 during the first two weeks (Time 1) of the semester as well as during the last two weeks (Time 2) of the semester. Participants also completed a personality inventory and financial risk tolerance scale both times and a delay-discounting task for $1,000 during Time 2. Delay discounting decreased in the financial education group at the end of the semester whereas there was no change in delay discounting in the abnormal psychology group. Financial education may be an effective method for reducing delay discounting.

Concepts: Behavioural sciences, Financial risk, Finance, Decision making, Behaviorism, Decision theory, Psychology, Risk

4

A key objective of the Medicare program is to reduce risk of financial catastrophe due to out-of-pocket healthcare expenditures. Yet little is known about cumulative financial risks arising from out-of-pocket healthcare expenditures faced by older adults, particularly near the end of life.

Concepts: Insurance, Life, Investment, Actuarial science, Financial risk, Finance, Risk

2

Empirical evidence demonstrates that the Thai Universal Coverage Scheme (UCS) has improved equity of health financing and provided a relatively high level of financial risk protection. Several UCS design features contribute to these outcomes: a tax-financed scheme, a comprehensive benefit package and gradual extension of coverage to illnesses that can lead to catastrophic household costs, and capacity of the National Health Security Office (NHSO) to mobilise adequate resources. This study assesses the policy processes related to making decisions on these features.

Concepts: Design, Investment, Bond, Decision making, Financial risk, Economics, Finance, Risk

1

Because of high purchase costs of newer vaccines, financial risk to private vaccination providers has increased. We assessed among pediatricians and family physicians satisfaction with insurance payment for vaccine purchase and administration by payer type, the proportion who have considered discontinuing provision of all childhood vaccines for financial reasons, and strategies used for handling uncertainty about insurance coverage when new vaccines first become available.

Concepts: Vaccination, Vaccine, Actuarial science, Investment, Financial risk, Finance, Risk

0

Improving the economic well-being of the girls and women is a key to reducing re-trafficking and in providing stability that survivors can use to rebuild their lives. The study looks at how various sociodemographic traits affected the financial capability of n = 144 women and girls who received intervention at a residential care facility in Ghana, West Africa. Three domain of financial capability are assessed in this, i.e., financial risk, financial planning, and financial saving. A scaled likelihood ratio test (chi-square difference test) was used to evaluate the significance of each direct covariate effect(%). Each of the overall goodness-of-fit indices suggested that the initial CFA model fit the data well, χ2(19, N = 144) = 31.45, p = 0.04, RMSEA = 0.067 (90% CI: 0.017-0.108), TLI = 0.923, CFI = 0.948. Older women reported lower levels of financial savings than younger women. We found that women with secondary school education or higher reported significantly higher financial risk than women with less education. Women with children reported lower levels of financial saving than women without children. Married women indicated significantly more financial saving than single women. There was a significant negative effect of time spent in trafficking conditions on financial saving, indicating the highest average level of financial savings at intervention and decreased thereafter. Programs and policies in resource-scarce contexts that aim to assist trafficking survivors must go beyond providing psychosocial counseling and focus also on economic development opportunities.

Concepts: Financial risk, Finance, Economic development, Risk, Likelihood-ratio test, Secondary education, Investment, Personal finance

0

Non-financial interests, and the conflicts of interest that may result from them, are frequently overlooked in biomedicine. This is partly due to the complex and varied nature of these interests, and the limited evidence available regarding their prevalence and impact on biomedical research and clinical practice. We suggest that there are no meaningful conceptual distinctions, and few practical differences, between financial and non-financial conflicts of interest, and accordingly, that both require careful consideration. Further, a better understanding of the complexities of non-financial conflicts of interest, and their entanglement with financial conflicts of interest, may assist in the development of a more sophisticated approach to all forms of conflicts of interest.

Concepts: Financial risk, Clinical trial, Endocrinology, Orphan drug, Economics, Investment, Finance, Biomedical scientist

0

Graphs show promise for improving communications about different types of risks, including health risks, financial risks, and climate risks. However, graph designs that are effective at meeting one important risk communication goal (promoting risk-avoidant behaviors) can at the same time compromise another key goal (improving risk understanding). We developed and tested simple bar graphs aimed at accomplishing these two goals simultaneously. We manipulated two design features in graphs, namely, whether graphs depicted the number of people affected by a risk and those at risk of harm (“foreground+background”) versus only those affected (“foreground-only”), and the presence versus absence of simple numerical labels above bars. Foreground-only displays were associated with larger risk perceptions and risk-avoidant behavior (i.e., willingness to take a drug for heart attack prevention) than foreground+background displays, regardless of the presence of labels. Foreground-only graphs also hindered risk understanding when labels were not present. However, the presence of labels significantly improved understanding, eliminating the detrimental effect of foreground-only displays. Labels also led to more positive user evaluations of the graphs, but did not affect risk-avoidant behavior. Using process modeling we identified mediators (risk perceptions, understanding, user evaluations) that explained the effect of display type on risk-avoidant behavior. Our findings contribute new evidence to the graph design literature: unlike what was previously feared, we demonstrate that it is possible to design foreground-only graphs that promote intentions for behavior change without a detrimental effect on risk understanding. Implications for the design of graphical risk communications and decision support are discussed.

Concepts: Financial risk, Effect, Uncertainty, Psychology, Risk management, Affect, Risk, Decision theory

0

China uses both social health insurance (SHI) programs and a medical financial assistance (MFA) program to protect the poor from illness-induced financial risks. The MFA provides a dual benefit package targeting low-income families: subsidizing these families' participation in SHI programs, and providing cash aid to protect them from catastrophic health expenditure (CHE). This study aims to investigate: (1) the association between MFA subvention for SHI enrollment and SHI enrollment; (2) the association between MFA cash aid and CHE; and (3) the association between SHI enrollment and CHE in low-income households in China.

Concepts: Financial risk, Risk, Disability insurance, Health insurance, Economics, Health care, Healthcare reform, Health economics