Risk and Culture -- Why Americans are Weird (About Risk)
When I first got into research full time almost 15 years ago, I went in with a set of naïve preconceived notions about what the consumer of the future would look like. Globalization was in full swing and the Internet had just really taken off for e-commerce. Smartphones and social media weren’t yet en vogue, but since I felt myself to be very much a citizen of the world, I believed the customer of the future would be that way, too, with behaviors converging towards an always-online, 24/7 communicating, shopping, playing, in short living mode.
Did I mention I was naïve? My very first consumer study started out examining the deceptively simple question “what do consumers think when they hear ‘insurance’?”  Having worked in the industry for more than a decade already, I of course knew that insurance was largely a local business, thanks to regulation, but I had assumed that the internet-savvy customer of the future would overcome this. But when the results come back from the countries we had surveyed, I found that nothing could be further from the truth: almost everything on the question “what about insurance” differed from country to country. And not just from country to country, but even looking at distinct populations within countries. Consider Belgium, for example: the attitudes and behaviors of the French-speaking Walloons are very close to their French neighbors, but pretty far off from their Flemish compatriots.
This experience first got me looking into the effect of culture on insurance and risk, and I’d like to give a little background in this post. Most of what I’ll be talking about comes from the research of Dutch cultural anthropologist Geert Hofstede.
Culture is a fascinating subject. According to Hofstede, culture manifests in four layers: symbols, heroes, rituals, and values. These are progressively less mutable, with symbols (which includes e.g. specific language, or signifiers of status or group membership) being the quickest to change, and value being the highest longevity. When we assume “culture changes so fast nowadays” it’s actually the symbols (and heroes) we see changing quickly. As Hofstede shows, the underlying values take a long time, up to centuries, to evolve.
It’s the values that best describe a culture. Like most cultural frameworks, these are visualized in a set of dimensions – originally four, with two more added later when data was accumulated from more countries; as it turns out, there are some values that don’t show up at all as a distinctive trait in Western cultures, but do in Asia, namely ‘long-term thinking’.
For simplicity, I’ll stick with the original four plus one:
Power distance (how hierarchial is a society and how much is that hierarchy accepted by those at the bottom)
Invididualism vs. collectivism
Uncertainty avoidance (how important are rules)
Masculinity vs. femininity (basically assertiveness vs. cooperation, i.e. the clichés of male and female behaviors)
Long-term vs. short-term orientation
Armed with the knowledge how cultural groups measure along these dimensions, we can start to understand their attitude about risk. Germans score high on the uncertainty avoidance index – we like rules and certainties, and living in a country without a written constitution such as the U.K. would probably drive us nuts. Consequently we tend to be overinsured, and overall risk averse. While we have to keep in mind that we are talking about the average German, on the aggregate the numbers (for insurance coverage per household etc.) bears these statements out. Also, it can start helping explain why Germany has been getting through COVID so much better than most European neighbors despite not going into heavy lockdowns or other restrictions. (But COVID is a topic for another set of posts.)
So, to get to the headline, what about Americans? When I wrote that Americans are weird, that was from a very German perspective. The US has a very high score for individualism; combine that with high masculinity and lower middling uncertainty avoidance, and for risk you see the stereotypical American “every man for himself, I am immune from bad things, and anyway I’ll just power through this” attitude emerging. This is reinforced by American symbols (e.g. Harley-Davidson as iconic company), heroes (e.g. John Wayne), and rituals.
I think that’s enough detail for today. Let’s see how and if discussion on this shapes up, and then we might look into some more country/culture’s risk attitude through the cultural dimension lens. I did once devote an entire study to the cross-country differences in insurance behaviors, so I definitely think this is a fascinating topic.
 In case you’re curious, that study was called “Trust, transparency and technology: European customers’ perspectives on insurance and innovation”. You can still find a few citations, but not download the study itself. Just let me know if you want to read it.
 While Hofstede’s approach has been criticized, it has the advantage of being fairly straightforward and thus well suited as an introduction to the concept.
 I didn’t mean the every ‘man’ literally in this case – the interesting thing about the masculinity-femininity score when comparing for example the US (score 62) and Sweden (score 5) is that in the US, women are more “male” than men are in Sweden.