In my previous post, we saw how the direct relationship between risk-taking and youth — the observation that young people are especially vulnerable to wishful thinking and risk-seeking thrills — can be traced back to Book I, Chapter 10 of The Wealth of Nations. For Adam Smith, the paradigm case of this risk-taking behavior is “the readiness of the common People to enlist as soldiers, or to go to sea.” (WN, I.x.29) Smith elaborates on these two examples in the next two paragraphs (Paras. 30 & 31) of Book I, Ch. 10.

First, Smith asks, why are young people so willing and eager to volunteer to join the armed forces–not only in times of peace but even when war is looming on the horizon? After all, by enlisting they are putting their very lives at risk! And yet, the outbreak of hostilities is the time when the armed forces are able to recruit the most, or in the immortal words of Adam Smith, “young volunteers never enlist so readily as at the beginning of a new war”! (WN, I.x.30) But why? According to Smith, the answer once again is optimism bias (“romantic hopes”), which is especially pronounced among young people:

“What a common soldier may lose is obvious enough. Without regarding the danger, however, young volunteers never enlist so readily as at the beginning of a new war; and though they [the young volunteers] have scarce any chance of preferment, they figure to themselves, in their youthful fancies, a thousand occasions of acquiring honour and distinction which never occur. These romantic hopes make the whole price of their blood. Their pay is less than that of common labourers, and in actual service their fatigues are much greater.” (WN, I.x.30; my emphasis)

In other words, enlisting in the armed forces is like buying a lottery ticket. The “prize” or jackpot could be a detrimental one, i.e. a negative prize or reverse jackpot (you could be killed or maimed), but it could also be a beneficial one: the acquisition of “honour and distinction.” (Id.) Either way, when a young man enlists in the army, he is essentially playing a kind of lottery. But this observation begs the question, Why would anyone participate in such a lottery when the probability of winning a negative prize is just as great, if not greater, than the probability of winning a positive prize? In two words: optimism bias, or to quote Adam Smith, “romantic hopes”! (Id.)

As an aside, notice how Smith further observes that these “romantic hopes” of glory and honor are a form of compensation. Even though soldiers end up doing much more work than their civilian counterparts do (“their fatigues are much greater”), they are paid less! How can this discrepancy be the case? Because a soldier’s compensation cannot be counted in just dollars and cents (or pounds and shillings). A soldier’s compensation includes the small chance that he will perform heroic deeds and become a national hero and be long remembered even after he is dead.

What about the navy? You would think the same lottery-like logic as above applies to the decision to become a sailor, but as it happens, Smith’s is far more sanguine about naval occupations than military careers on land. Why does Smith have much more positive things to say about the Navy? I will turn to this question in my next post. (To be continued…)