A woman talks on her cell phone in front of a window displaying many skyscrapers
"Hello, I'd like to invest heavily in Bitcoin." Toru Hanai/Reuters

A new study suggests that being on a higher floor in a building increases a person’s willingness to take financial risks.  

If you’re in a penthouse, stay away from the ponies: Researchers have found that people are more likely to take financial risks at higher elevations inside a building.

In a study published recently in the Journal of Consumer Psychology, researchers looked at data from more than 3,000 hedge funds all over the world and found a “weak but significant” correlation between the volatility of each fund and the elevation of the building floor (ranging from the first to the 96th) where the firm was located.

The finding seems to reflect a fact of commercial real estate: The higher the office, the more expensive it is to rent or own, so a company sitting pretty at the top may have more money to wager. But the study was designed to test the effect of elevation on individuals, not just corporate entities.

In one experiment, participants made bets inside the glass elevator of a tall building. In some cases the elevator was ascending, and in others it was descending. As the elevator ascended, those who traveled up to the 72nd floor were more likely to choose a riskier bet. The descending group, on the other hand, opted for a more conservative choice.

In another experiment, researchers asked some participants on the ground floor and others on the third floor of a building to make 10 decisions, each of which had different risk and payoff options. Those on the third floor chose riskier options more frequently than people on the ground floor.

Sina Esteky, the lead author of the study and an assistant professor of marketing at Miami University in Ohio, noted that there’s an architectural association between elevation and power stretching back through history. “Powerful buildings are put on top of a hill, [and] a lot of religions discuss divinity, or people of high power, being in high physical positions. It seems to be a deeply rooted association, [and] it seemed like the reason elevation can lead to people taking more risks is they usually feel more powerful.”

One person who’s well aware of the connection between building height and power is penthouse owner Donald Trump. As a developer, Trump routinely inflated the number of floors in his buildings, because, he said, people “like to have apartments that have height, the psychology of it.”

In their paper, the authors note that although past research has looked at how “atmospheric factors” like lighting and sound can affect consumer decisions, few studies have delved into the effects of spatial positioning. This, they write, is surprising, because “with rapid urbanization, particularly vertical expansion in high-density urban environments, consumers are making a growing number of decisions in multi-story buildings.”

Meanwhile, there has never been more opportunity to work high above the ground. The number of super-tall skyscrapers around the world keeps rising, especially in financial centers like New York City and Hong Kong, and 2017 set a record for the number of new skyscrapers built in a single year. That could mean more people working on the 65th or 82nd floor who are tempted to wager their kid’s college fund on cryptocurrency.

Esteky, who has dual Ph.D.s in business administration and architecture, doesn’t want to do away with elevated towers: “I would not encourage architects or urban designers not to design skyscrapers or high-rises—I think they’re necessary with the amount of density we have in cities,” he said. “But designers and consumers need to be mindful of these subtle effects that aren’t as subtle as we think.” He recommends that designers and developers think carefully about how to deal with urban elevation. For instance, a restaurant might work better than a hedge fund on the top floor of a tower.

“If you’re talking about high-stakes risk-taking—financial, medical, legal—I would encourage people not to put their offices on high levels of a building,” Esteky said. “Or, if they are [near the top]: have a thick curtain.”

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