How culture is affected by individuals
Then word culture has various different meanings. When culture was used in personal work, it was represented as something difficult to understand which involves customs, art, knowledge, belief, laws, morals and other habits and qualities obtained by being part of a society. A cultural definition of cross-national variations in risk preference features variations in choices which are risky to long term cultural differences in beliefs or customs. This differs from other explanations such as present cross-national variations in socio-economic situations or in ideal arousal level.
Cultural belief and values develop how individuals, that make part of a society, consistently look at risk and acknowledge them. New risks are developing constantly and they are recognised through current cultural orientations. Therefore, cultural and psychological dimensions are important in risk perception.
Risk and potential threats
In everyday life we come across several potential threats. In almost every situation, there is the chance that one can observe some factors to be less or more dangerous. It can occur from simply being distracted while driving, suffering from asthma due to polluted air, hit by a vehicle or being attacked while walking down the street. Therefore, it is impossible for individuals to deal with every risk and people cannot prevent themselves from facing potentially-hazardous risk sources. The riskier activities are not recognised as being more threatening than less risky activities so risk judgments are not all likely to be rational. Objective risk will differ from perceived risk which is also known as subjective risk judgements. Since people are affected by their environment this influences acknowledgement, behaviour and also individual decisions. Cultural theory is an effective theory with the goal to give an understanding risk perception, this was introduced by Mary Douglas in 1978.
Risk information and behaviour factors
An important role when approaching risk magnitude is the presentation format of risk information. There are several types of risk-information formats, therefore one can make a decision to choose depending on the objective of the communication of risk. One would expect that risk communication is enhanced when controlling the information presented. This helps the decision-maker identify risks better and more informed decisions can be made. It is uncertain if the effects of risk information formats are consistent for various types of individual. For example, differences in the individual’s gender, criminality and nationality can affect their risk taking behaviour. Therefore, when recognising the various types of risk-information formats, the objective of the communication and the aspects of the perceiver both have to be considered.
Risk-taking is influenced by several risk-behaviour factors (RBFs). Certain factors can describe the individual more, for example their behaviour toward a specific type of risk, which could be originated from their gender, cultural upbringing or some personality trait. Some factors are associated more to the case where the risk is being evaluated, for example the way risk information is presented.
Cross-cultural Differences in Risk Preference
According to some studies the judgement and decision making of an individual is influenced by his/her background. When answering general knowledge questions, Asians have been established to be more exaggerated in their estimates of confidence, which means that they are more certain of the confidence rating scale. Additionally, differences between people from several cultures have been found in the amount of disconfirmation in testing hypothesis and in susceptibility to cognitive biases linked to financial investment. Risk behaviour can be anticipated by genetic differences which is implied from the latest studies. Therefore, it has been debated that risk perception needs to be designed as a psychological variable that is an issue to possible cultural and individual differences. This could be applicable as the meaning and recognition of risk is associated to a cultural system of meaning and social definitions.
The case that a particular and circumstantial differences in possible risk-taking are arbitrated by differences in the view of the related risks of choice options increments the possibility that national variations in favourable for prudent policies might be created by cultural or national variations in the perceived risks of precautionary and other policies.
Hsee and Weber’s Research
Hsee and Weber carried out a research where they compared cultural differences between Chinese and Americans and they analysed the different results when choosing riskier options.
While doing their research for viable cultural understandings for differences in risk preference between American and Chinese participants. Hsee and Weber concentrated mostly on the dimension which is the strongest of cultural difference observed by Hofstede (1980) during his research on workers of a multinational companies with firms in 53 different countries, especially collectivism-individualism.
It is known that Westerners take less risks than Asians. The “cushion hypothesis” normally explains this, which suggests that when people they have a higher social support they can be more risk seeking. It is discussed that when compared to the more individualistic culture found in the west (e.g. In the US) that people from China can rely on higher social support because of the collectivistic culture and so they are more willing to take risks.
Classifying their speculation “cushion hypothesis,” they discuss that in socially-collectivist cultures such as China, when their family or any other members in a group will do anything to provide help to other members in the same group who experience a large and possibly destructive loss after choosing a risky opportunity. On the other hand, in individualist cultures such as the United States, an individual that makes risky choices is likely to face the issue from a bad decision outcome. Therefore, collectivism functions as a cushion against losses which may occur, such as social diversification of the risks of risky choices. This means that when an insurance policy is bought there is less risk, social diversification compensates for a bad outcome of the risky choice taken and therefore this decrease the risk for individuals in a collectivist culture.
Recent studies have also shown that cultural background may not only influence a person’s behaviour to risk, but also how they view risk. Chinese decision makers have a higher risk seeking attitude than Americans because of the diversified approach of the investments’ risk from the Americans, not from the variation in their risk attitude parameters, according to the PRAM approach of Weber and Hsee (1998). Asian participants might expect risks to be low so they make riskier decisions.
Weber, Bottom and Bontempo’s Research
In a different research Weber, Bottom and Bontempo (1997) compared risk judgments of students specialising in business and security analysts from Taiwan and Hong Kong with those from the Netherlands and USA. They realised that the magnitude of loss and the probability of loss had a higher effect on recognised risk between Asian and Western players. However, there was no important difference in risk perception amongst the groups which where the security analysts and students proposing that the environment and upbringing influence the risk perception more than expertise and professional training. It was unexpected that there was no effect of the expertise on risk perception as it has been known to influence how data is perceived and used to make less risky decisions. For example, experts constantly enhance a mental representation of alternatives with more information and their linked attribute structure. Therefore, specialists tend to make better use of choice attributes. Certain studies have noticed differences between specialists and non-specialists in their risk judgments and others have not. In those that established effects, there was proof of a decline in estimates of risk by specialists. Nonetheless, the extent that these differences are regulated by alternatives in risk perception or risk attitude is uncertain.
Although people coming from several cultural groups can have some differences in risk perception and risk attitude, it does not mean that the biasing effects of risk-pricing formats have to be similar in different cultural groups.
An individual’s risk-taking behaviour is affected by culture and domain experience. It is assumed that these characteristics may have an influence on risk perception and on the impact of risk-information formats on choice attitudes. Hypothesis 2 test was carried out to find out this possibility. The following is the Hypothesis 2.
H2: Domain and culture experience negotiate the distortive impact of risk-pricing formats.
If this is the case, it would prove Weber and colleagues’ discussion, that culture and experience are a part of the perceptual processes of encoding risk magnitude from the chosen data. More importantly, it would need the right modelling approach in which effect of various formats on risk perception may rely on the person’s experience and background.
Slovic, together with other researchers established cross-cultural variations in the perception of the riskiness of events that threatens to safety and health.
Several people are likely to be cultural-specific. Some examples include race and sex. In the United states, for example, the group of males which are white that earn high incomes, have conservative political preferences and good educations are most likely to identify risks to be distinctly smaller and better to manage than other women, men and members of minority races. The “white male effect” that other researchers also approved, could be associated to America’s white men with a high status. This is likely to provide them with more realistic and also perceived authority over hazards. Effects on gender and race tend to differ through various nations as culture creates the respective equality or inequality amongst the different racial groups and sexes. A similar characteristic observed by Slovic influencing risk perception is the quality of trust in organisations especially those operates in risk management. This can differ from one culture to another and also from one individual to another. If there is no trust in social institutions this indicates that there is doubt about their ability and willingness to safeguard citizens, therefore, this may increase the negative affective reaction to possible hazards. Viklund in 2003 established in his studies in Europe which included France, Spain, Sweden and United Kingdom that trust essentially anticipated perceived risk across countries and also within countries, however, there was an adequately weak relationship. Mass media can play an important part in a country so it can increase or weaken the public’s trust.