Risk Aversion in Parents

Depending on your age and what generation you grew up in, your childhood may have been very different in comparisons to someone else’s of another generation. I am over 30 years old and as a kid (age 8-12), I remember playing outside for hours with friends without any adult supervision. We would ride bikes around the neighborhood with other neighborhood kids, we would play at the park digging for “Indian clay”, or we would simple be playing a sport or running around. The main rule was to go home for dinner when the sun started to set or you heard your mother calling your name outside. Very few kids of younger generations can say they experienced the same. Risk aversion has changed over time with parents. Risk aversion is the tendency to make decision to avoid risk. Our book used examples based on economics and finance but our risk aversion in how we live our lives can also impact how we raise our children.

A new term on categorizing certain parents has been created within the last decade that did not exist in my generation much; “Helicopter Parent”. A helicopter parent is described a parent who pays extremely close attention to a child’s experiences and problems; hovering over them like a helicopter would. There is a correlation with risk avert parents and helicopter parents. They both are potentially making the mistake of not allowing their own children to take risks which will negatively influence the type of adult they will become. An article by Tim Elmore on Leading the Next Generation pin pointed 3 main issues; We Risk Too Little, We Rescue Too Quickly, We Rave Too Easily.

Being around my sisters and their children, I often observe the behavior of different parents they associate with. It’s a constant, “be careful, don’t do that, you’ll get hurt, don’t run so fast etc.” Parents with risk aversion are passing the torch down to their kids. These kids will start to portrait similar behaviors taught and observed by their parents. Elmore’s article mentioned that a study was done by Sarah Brown at the University of Sheffield in the UK and the results showed that “children of risk-averse parents have lower test scores and are slightly less likely to attend college than offspring of parents with more tolerant attitudes toward risk.” Parental risk aversion can directly influence their child’s future.

With risk aversion, there is a will to want to rescue or help out too quickly as well as a tendency to overpraise each step your child takes. We want to do everything for our kids. We want to help them with each homework assignment so that they pass their classes. There are parents that complete entire projects for their kids in effort to make sure they get into a good college. I can understand that education has become competitive but such behavior from the parent won’t help the child in the long run. The risk of the child not being accepted to a particular school is far worse than the child learning on their own and going to a school more suitable based on his/her education level. Everything our kids may do is “amazing” but we have a tendency to magnify small accomplishments. Parents definitely need to make sure that their child’s self-esteem doesn’t drop but there also needs to be recognition that not everyone gets a trophy and that it is ok. Strength, motivation to try harder and working to overcome challenges is learned through hardship and failure. Risk aversion parents are attempting to protect their children from that failure.

I agree with Elmore’s article in the message he is trying to convey. Risk aversion in parents has substantially increased in the last few decades since I was a child. I don’t know if it has to do with added pressure from education institutes, seeing more missing or hurt children from different media outlets or increased fear from other outside influences. Risk aversion is mainly used in examples of monetary situation but children can also be seen as our investment to our futures and we want to protect them.


Elmore, T. (2013, February 15). Three Huge Mistakes We Make Leading Kids…and How to Correct Them. Retrieved December 2, 2014, from http://growingleaders.com/blog/3-mistakes-we-make-leading-kids/

Leave a Reply