Yesterday, over lunch, a friend of mine (who works in the opinion journalism world) commented, apropos of I forget what, that the hard-core libertarians he knows are also among the most risk-averse people he knows. I don’t know a lot of hard-core libertarians myself, but he was pretty firm in his opinion.

We puzzled over the possible reasons for such a connection. He suggested that libertarians, because they don’t believe there should be a safety net, don’t believe, deep down, that there is a safety net. They feel completely responsible for their actions, and find that paralyzing. That didn’t sound right to me. I offered, on the assumption that he was right about the correlation, that perhaps the root of both risk-aversion and a predisposition to a certain kind of libertarianism was a deep pessimism about institutions, or more generally about the durability of social capital.

So, for example, goldbugs abound in libertarian circles – not merely people who, as a matter of policy, favor a gold standard, but people who put their money where their mouth is and invest in gold. This is rarely a wise investment strategy, and certainly isn’t risk-averse in any objective sense, but it does speak to an aversion to a certain kind of risk: the risk of a catastrophic collapse of normal economic institutions. Similarly, the people I know who are obsessed with protecting their electronic privacy tend to libertarian-y politics. And, again, that’s not really “risk-aversion” but it is a fear of being enmeshed in a malign social, political or economic net.

That didn’t sound right to him, among other things because he was talking about more mundane things like switching jobs or careers, and it wasn’t obvious to him why pessimism about institutions would make someone less likely to make those kinds of switches.

When I think about the entrepreneurs I know – people who cannot, in their professional lives, be considered “risk-averse” but who are, if they are good at what they do, very good at calculating what constitutes a good (even if high) risk, they tend to fall into either the “liberal-tarian” camp – socially liberal, often fairly left-wing on meat-and-potatoes issues, but insulted by the nanny state and inclined to favor using market mechanisms wherever possible to solve problems – or into the conventional pro-business Republican camp. I don’t think either of these are the kinds of people my friend is talking about.

So: what do you think? Does my friend’s observation accord with your experience? Are hard-libertarians among the more risk-averse people you know with respect to how they live their lives? If so, why do you think that is? If not, do you think my friend is just wrong or he is observing something real that isn’t best described as “risk-aversion”?