The Evolution of Human Risk Tolerance Through ADHD and its Impacts on Socioeconomic Activity

Risk-tolerance is critical to economic activity, affecting numerous socioeconomic outcomes such as occupational choice and educational attainment. Individuals vary in their risk-tolerance. Neoclassical economics struggles to explain the irrational risk-taking of certain individuals, as it does not concern itself with the cause of risk-preferences. This has resulted in poor analytical tractability for economic activities, such as entrepreneurship. Entrepreneurship is a key occupational choice for economic growth. From an expected utility hypothesis perspective, entrepreneurship is irrational. Using ADHD-like behaviours, this thesis argues for the integration of biology into economics to demonstrate that irrational behaviours are rational and beneficial from an evolutionary perspective. Risk-tolerance has an evolutionary basis and evolutionary evidence indicates that ADHD-like behaviours provided greater risk-tolerance; assisting humans in exiting the single point of origin, migrating to new lands and relaying this information to the risk-averse population. Thus, what appears to be irrational risk-taking in the modern concept is rational behaviour through the lens of evolutionary biology. As such, one is able to see that excess risk-tolerance maximises the individuals’ utility through high risk activities and benefits society, if risk-tolerance is beneficial in the economic climate. In the modern economy, ADHD is a disorder and the evolutionary basis is overlooked in the discipline of economics. This thesis contributes to the understanding of risk-preferences in economics by adapting the unified growth theory, to show that ADHD behaviours increase risk-tolerance and these behaviours have positive and negative effects. Empirical evidence in the thesis shows the behaviours increase selection into entrepreneurship, providing greater analytical tractability for an economic activity that has previously eluded it. At the same time, the thesis shows that mitigating the negative effects of ADHD are contingent upon its interaction with the environment, for instance, ADHD symptoms interact with socioeconomic background to reduce educational attainment in certain groups in society. The results lead to policy recommendations that may increase economic activity and GDP.