Risk preferences are a central concept in economics that describes how individuals make decisions under uncertainty.

Here’s how economists define it:

Risk-averse individuals prefer a certain outcome over a gamble with the same expected value. In other words, they avoid uncertainty—even if taking a risk might result in a higher payoff. Buying home insurance or choosing a fixed-rate mortgage are everyday examples of risk-averse behaviour.

Risk-loving individuals prefer to take on more risk, even when the potential reward isn’t dramatically higher. They derive satisfaction from uncertainty and the possibility of a big win, even if it comes with a higher chance of loss. Gambling, speculative investing, or entrepreneurial ventures often appeal to risk-lovers.

Of course, not everyone fits neatly into one category. Many of us are risk-neutral in some decisions, risk-averse in others, and risk-loving in situations where the stakes feel lower or the excitement higher.

Research suggests that these preferences aren’t fixed. In a 2009 article in the American Economic Review, Netzer discusses how both time preferences and attitudes toward risk can evolve. Age, income, past experiences, and even cultural context can all shape how we evaluate uncertainty.

So, are we seeking security or adventure?

Like most people, it depends on the decision—and on the day. We may love the thrill of travel but value stability in our finances. Economics helps us understand those trade-offs.

This links closely to another core idea in economics: intertemporal consumption—how people choose between consuming now vs. later. Do we save for the future (security)? Or spend today (adventure)? These choices happen at both the individual and macroeconomic levels. We recently explained this in a reel and case study.