

We all know that with great risk, we have an opportunity of great reward. When investing financially throughout one's life, people tend to make larger gambles early in their career, and invest more cautiously later in their life. It's not that the younger investors are more naive; it's the smart decision to make. The benefit of the risk is the high reward that may put you at an advantage for the rest of your life. If that risk does not pay out, you still have the rest of your life to recover such that you may only be at a slight disadvantage from where you would have stood otherwise.



How does financial risk apply to the literal perilous risks of a youth? The reward is the opportunity to learn and advance socially; while the risk could even include death. "But hold on", you may say. "This analogy is entirely flawed... If we were to die, there is no ability to recover like you could with a financial investment gone sour." The catch is that the analogy is not applying to ourselves as humans, but applying to ourselves as genes. Richard Dawkins has unfurled evolution as a beautifully simple concept which revolves around the goals of the gene, and not the individual. “Individuals are not stable things, they are fleeting. Chromosomes too are shuffled into oblivion, like hands of cards soon after they are dealt. But the cards themselves survive the shuffling. The cards are the genes. The genes are not destroyed by crossing-over, they merely change partners and march on. Of course they march on. That is their business. They are the replicators and we are their survival machines. When we have served our purpose we are cast aside. But genes are denizens of geological time: genes are forever.” - Richard Dawkins, The Selfish Gene. If you are to think of our bodies as the currency and the genes as the investor, the analogy falls into place. In the case that an over-risky youth dies early, the parents still have time to create more "currency" for their genes. We'll call this the "child replacement effect". It sounds heartless that our genes who we live and die for should treat us this way, but keep in mind that these are mindless machines acting purely on probability.



Still, there are many other factors which effect risk as you age. For example, after passing through your teenage years, you're more likely to have offspring to take care of. Your offspring have half of your genes; so to take life threatening risks not only puts the genes in your body in danger, but prevents you from caring for the genes in your offspring.



So if there are other factors which could affect your risk with age, how can we be certain that the child replacement effect has any weight in the matter? If you turn the problem around it states: if your parents are more likely to have an additional child in the (unfortunate) event of your death, then your genes will design you to be more risky. To see why this is true we will convert the problem to an estimated value equation. Your siblings carry half of your genes on average. Your parents have an x% chance of having another child in the case of your death and a y% chance in the case that you live. Let's assume x=55 and y=40. Under these conditions, if you were to die, 7.5% (.5*(.55-.4)) more of your genes will exist compared to the alternative situation where your parents do not subscribe to the "child replacement" strategy. If you went to Las Vegas and the casino claimed to pay you back 7.5% of your losses if you are to go bankrupt, then of course it makes sense that you will play slightly more risky than you would otherwise. Obviously you don't want to go bankrupt (or die), but from your gene's perspective, it's still not game over.





Conversely, assume that

the child replacement strategy does not exist. I

magine that you're balancing an equation where the

goal is to maximize the amount of genes we pass on in the long run. The knob we're tuning dictates how much risk we should take. It's easy to see how turning the knob too much one way or the other will offset the balance away from the maximum. After we have it perfectly balanced, imagine that now we introduce the child replacement strategy. The child replacement strategy gives slightly more motivation for our death, which implies you can afford more risk than you're currently tuned for and would throw the equation off balance. To re-balance we must adjust the knob in the favor of more risk.





All that we need to do now is show that the child replacement strategy is practiced.

was literally felt across the entire earth. A tsunami can provide unique statistical data in that it's unbiased to a victim's social status and can be isolated to a single point in time (unlike death from war or famine). Researchers found that mothers who suffered the death of their child were " 37 percent more likely to have another child by 2009 regardless of the child’s age " NBER Working Paper No. 20448) . Numerous other tragic events provide similar evidence, ranging from genocide ( Heuveline and Poch 2007) to earthquakes Finlay 2009) , all showing an increase in fertility rate with those exposed to the disaster. In 2004, a devastating tsunami ravaged Indonesia, killing 170 thousand citizens. The 9.2 magnitude catalyst earthquake



It's difficult to directly measure the magnitude of the child replacement effect, however we can be sure it exists.



This is a small application of the theories described in the classic novel, The Selfish Gene

Understanding the world from the gene's perspective is a fundamental tool for reasoning about human psychology, grasping the simplicity of evolution, and unraveling the meaning of our very existence. Why do cuckoo bird eggs mimic the look of other bird species? Why does menopause exist? What is the difference between our genes and a virus? I highly recommend you to add it to your reading list!