Compared with the mass affluent, high net worth individuals have which of the following tendencies regarding loss aversion?

Compared with the mass affluent, high net worth individuals have which of the following tendencies regarding loss aversion?

• A. More money-avoidance beliefs
• B. Less of a tendency for loss aversion
• C. Fewer money status beliefs
• D. More external locus of control

Answer: (B)

Loss aversion is the tendency to feel losses more deeply than gains of the same size. As wealth grows, investors can absorb larger drawdowns without compromising lifestyle or long-term goals, have longer time horizons, and can diversify more effectively. This reduces the emotional impact of short-term losses, making high net worth individuals more willing to endure temporary declines for potentially higher long-term returns. They’re also more likely to work with professionals and rely on disciplined strategies rather than reacting emotionally to market drops. So, compared with the mass affluent, high net worth individuals show less loss aversion.

Loss aversion is the tendency to feel losses more deeply than gains of the same size. As wealth grows, investors can absorb larger drawdowns without compromising lifestyle or long-term goals, have longer time horizons, and can diversify more effectively. This reduces the emotional impact of short-term losses, making high net worth individuals more willing to endure temporary declines for potentially higher long-term returns. They’re also more likely to work with professionals and rely on disciplined strategies rather than reacting emotionally to market drops. So, compared with the mass affluent, high net worth individuals show less loss aversion.