20/20 hindsight for the risk averse

People make decisions today with future outcomes in mind. The risk averse will act conservatively and are likely up giving up more than they gain as they take on a defensive position. ie. they have not considered the opportuity cost of what they do.

Idea

This way of thinking can be possibly rectified by placing the person at some time in the future and asking them to image how they would feel at that point in time and then ask them to reconsider the opportunity cost. There is a chance that they will change their decsison based on this hindsight.

Example 1: Talented executive desides to forgo leisure time (friends, family, lovers, travel, fitness) for 15 years (25 -40) and accepts high wage. This may seem logical. Now ask them to put themselves in the 40 yo shoes and to consider if the loss of quality of life was worth the $x they have accuulated.

Example 2: Couple close to retirement has a reasonable amount saved and decide to work for another 5 years (63 - 68) to acrue more with the fear that they may hit hard times. Now ask them to put themselves in the shoes of the 68 year old. Maybe there are only a couple of productive years left in their lives. What value would then be put in the previous 5 productive years. Propbably a lot more than what was accrued. ie. The relative value of the enjoyment of the previous 5 years will be valued much higher.

Tags
idea
risk
hindsight