scholarly journals Crowded out: Heterogeneity in risk attitudes among poor households in the US

2021 ◽  
Author(s):  
Arianna Galliera ◽  
E. Elisabet Rutström
Keyword(s):  
Risk Aversion ◽  
Field Experiments ◽  
Household Head ◽  
Negative Relationship ◽  
Household Size ◽  
Household Composition ◽  
Risk Attitudes ◽  
Risk Averse ◽  
Data Set ◽  
Poor Households

AbstractNot much is known about the heterogeneity of risk attitudes among poor households in rich countries. This paper provides estimates from a unique data set collected among the urban poor in Atlanta, Georgia. The data set includes lab-in-the-field experiments on the relationship between risk attitudes and several household characteristics. Apart from looking at income, wealth, and education, we are particularly interested in household composition as it captures the number and kind of people who are dependant on the income of the household head. Heads of households who are less risk averse may be willing to take on the extra risk from smaller resource margins resulting from additional dependants, implying a negative relationship between household size and risk aversion. However, if the size of the household is a result of exogenous forces some heads of households may become more risk averse with more dependants. Household size can also reflect a risk management choice that involves adding non-dependant members who can provide resources and risk sharing. However, this possibility is limited to homes that are not already too crowded. We find that household size correlates positively with the risk aversion of the head, but with a large proportion of children the correlation is strongly dampened. However, this negative effect of children is conditional on the home not already being crowded. These heterogeneous findings have implications for the design of new insurance, savings, and credit programs where risk attitudes are important to the decisions to adopt.

Cutoff Threshold Decisions for Classification Algorithms with Risk Aversion

2021 ◽  
Author(s):  
Andrea C. Hupman
Keyword(s):  
Risk Aversion ◽  
Risk Attitude ◽  
Classification Algorithm ◽  
Classification Algorithms ◽  
Risk Averse ◽  
Optimal Cutoff ◽  
Data Set ◽  
Risk Neutral ◽  
Bayes Algorithm ◽  
Cutoff Threshold

Classification algorithms predict the class membership of an unknown record. Methods such as logistic regression or the naïve Bayes algorithm produce a score related to the likelihood that a record belongs to a particular class. A cutoff threshold is then defined to delineate the prediction of one class over another. This paper derives analytic results for the selection of an optimal cutoff threshold for a classification algorithm that is used to inform a two-action decision in the cases of risk aversion and risk neutrality. The results provide insight to how the optimal cutoff thresholds relate to the associated costs and the sensitivity and specificity of the algorithm for both the risk neutral and risk averse decision makers. The optimal risk averse threshold is not reliably above or below the optimal risk neutral threshold, but the relation depends on the parameters of a particular application. The results further show the risk averse optimal threshold is insensitive to the size of the data set or the magnitude of the costs, but instead is sensitive to the proportion of positive records in the data and the ratio of costs. Numeric examples and sensitivity analysis derive further insight. Results show the percent value gap from a misspecified risk attitude increases as the specificity of the classification algorithm decreases.

The Determinants of Risk Aversion: The Role of Intergenerational Transmission

2013 ◽  
Vol 14 (2) ◽  
pp. 214-234 ◽  
Author(s):  
Maria De Paola
Keyword(s):  
Risk Aversion ◽  
Intergenerational Transmission ◽  
Individual Characteristics ◽  
Risk Attitudes ◽  
Risk Averse ◽  
The Public ◽  
Measures Of Risk ◽  
High Ability Students ◽  
The Relationship

AbstractThis article studies the relationship between risk attitudes and individual characteristics focusing on the intergenerational transmission of risk preferences. We use a dataset of a sample of Italyn students which allows us to build different measures of risk aversion based, respectively, on a survey asking students about their willingness to invest in a risky asset and about their preferences for job security and on the results of an entry test using explicit penalty points in the case of incorrect answers. In line with the findings highlighted by the existing literature, we find that women are more risk averse than men, more patient subjects are more risk averse, while high-ability students are less risk averse. As far as intergenerational transmission of preferences is concerned, it emerges that students whose fathers are entrepreneurs have a higher propensity to take risks, while students whose fathers are employed in the public sector are more risk averse. Only fathers matter with regards to their children’s risk attitudes. These results are robust to different measures of risk aversion and to different specifications of our model.

Pesticide Use and Risk Aversion in the French Wine Sector

2018 ◽  
Vol 13 (4) ◽  
pp. 451-460 ◽  
Author(s):  
Joël Aka ◽  
Adeline Alonso Ugaglia ◽  
Jean-Marie Lescot
Keyword(s):  
Risk Aversion ◽  
Maximum Yield ◽  
The Other ◽  
Risk Attitudes ◽  
Pesticide Use ◽  
Risk Averse ◽  
Network Database ◽  
Farm Accountancy Data Network ◽  
Wine Sector ◽  
Jel Classifications

AbstractThis paper studies the risk attitudes of winegrowers in France. In French viticulture, most of the production is done under an appellation regime that constrains maximum authorized yields. We consider a trans-log cost function under the constraint of this maximum yield and estimate winegrowers' attitudes to risk. Our estimates are based on the European Farm Accountancy Data Network database (2005–2014) and data from the French National Institute of Origin and Quality. We find that winegrowers are risk averse. For the majority of winegrowers, risk aversion is declining with expected profit. In the Champagne region, however, where expected profits are far higher than in the other regions, we observe the reverse relation: winegrowers become more risk averse as expected profits rise. (JEL Classifications: C13, C33, O33, Q16).

scholarly journals Risk and Site Factors Affecting Potential Nitrogen Delivery in the Virginia Coastal Plain

2001 ◽  
Vol 33 (1) ◽  
pp. 173-188 ◽  
Author(s):  
Wei Peng ◽  
Darrell J. Bosch
Keyword(s):  
Surface Water ◽  
Risk Aversion ◽  
Coastal Plain ◽  
Stochastic Dominance ◽  
Risk Attitudes ◽  
Risk Averse ◽  
Site Factors ◽  
Factors Affecting ◽  
Fertilizer Recommendations ◽  
Different Levels

AbstractThe effects of cropland slope, distance to surface water, farmers' risk attitudes, and farmers' nitrogen (N) fertilizer applications on potential N delivery to streams and costs of reducing N delivery were evaluated for a representative Virginia peanut-cotton farm. Target MOTAD and generalized stochastic dominance were used to select preferred plans for different levels of risk aversion. Costs of reducing N delivery were lower on farms where fields were located close to surface water, where N was overapplied relative to extension fertilizer recommendations, and where the operator was risk averse. Cropland slope had less effect on cost of reducing N delivery relative to other factors.

scholarly journals Why Buy Accident Forgiveness Policies? An Experiment

2018 ◽  
Vol 10 (8) ◽  
pp. 1
Author(s):  
Fan Liu
Keyword(s):  
Decision Making ◽  
Risk Aversion ◽  
Time Preferences ◽  
Purchase Decision ◽  
Risk Attitudes ◽  
Purchase Decisions ◽  
Risk Averse ◽  
Product Price ◽  
High Degree

Risk and time preferences influence the insurance purchase decisions under uncertainty. Accident forgiveness, often considered as “premium insurance,” protects policyholders against a premium increase in the next period if an at-fault accident occurs. In this paper, by conducting a unique experiment in the controlled laboratory conditions, we examine the role of risk and time preferences in accident forgiveness purchase decisions. We find that individual discount rates and product price significantly affect premium insurance purchase decision. Interestingly, we also find evidence that less risk averse policyholders in general behave more like risk neutral when making insurance decision. Risk attitudes affect insurance decision-making only among those who have relatively high degree of risk aversion.

scholarly journals Does Education Increase Risk Aversion in Households? Some Evidence Using Artefactual Experiments in Peru

2021 ◽  
pp. 1-19
Author(s):  
Alberto Chong ◽  
Joan Martínez
Keyword(s):  
Risk Aversion ◽  
Empirical Evidence ◽  
Field Experiments ◽  
Causal Link ◽  
Risk Attitudes ◽  
New Schools ◽  
Representative Data ◽  
Increase Risk ◽  
Measures Of Risk ◽  
Identification Strategy

We provide empirical evidence supporting a causal link between education and risk attitudes when using representative data from representative surveys and artefactual or lab-on-the-field experiments in Lima, Peru. We employ three standard experimental measures of risk attitudes and find that each is positively correlated with years of education. Furthermore, we suggest that this relationship may be causal as we take advantage of an identification strategy that exploits an exogenous boom in the construction of new schools in Lima, providing evidence that more education may increase risk attitudes. Our findings are further confirmed when applying a broad set of robustness tests.

scholarly journals Measuring the impact of interaction between children of a matrilineal and a patriarchal culture on gender differences in risk aversion

2019 ◽  
Vol 116 (14) ◽  
pp. 6713-6719 ◽  
Author(s):  
Elaine M. Liu ◽  
Sharon Xuejing Zuo
Keyword(s):  
Middle School ◽  
Middle School Students ◽  
Risk Aversion ◽  
Gender Gap ◽  
Field Experiments ◽  
Gender Norms ◽  
Risk Averse ◽  
School Students ◽  
The Impact ◽  
Opposite Gender

Many studies find that women are more risk averse than men. Why does such a gender gap exist, and how malleable is this gender gap in risk aversion? The paper takes advantage of a rare setting in which children of the matrilineal Mosuo and the traditionally patriarchal Han attend the same schools in Yunnan, China to shed light on these questions. In particular, we exploit the fact that children would experience a shock in gender norms when they start to intermingle with children from other ethnic groups with the opposite gender norms at school. Using survey and field experiments, we elicit risk attitudes from Mosuo and Han elementary and middle school students. We find that, at the time when they first enter school, Mosuo and Han children exhibit opposite gender norms—Mosuo girls take more risks than Mosuo boys, while Han girls are more risk averse than Han boys, reflecting cultural differences. However, after Mosuo students spend more time with Han students, Mosuo girls become more and more risk averse. By age 11, Mosuo girls are also more risk averse than Mosuo boys. We also observe a shrinking gap in risk aversion for Han over time. Using random roommate assignment for boarding middle school students, we find Mosuo boys who have fewer Mosuo roommates behave more similarly to Han boys. This shows that risk preferences are shaped by culture and malleable in response to new environments.

scholarly journals Soil solution phosphorus turnover: derivation, interpretation, and insights from a global compilation of isotope exchange kinetic studies

2018 ◽  
Vol 15 (1) ◽  
pp. 105-114 ◽  
Author(s):  
Julian Helfenstein ◽  
Jannes Jegminat ◽  
Timothy I. McLaren ◽  
Emmanuel Frossard
Keyword(s):  
Soil Solution ◽  
Field Experiments ◽  
Solid Phase ◽  
Negative Relationship ◽  
Data Set ◽  
P Fertilizer ◽  
Exchange Kinetic ◽  
Soil Solution P ◽  
Kinetics Of

Abstract. The exchange rate of inorganic phosphorus (P) between the soil solution and solid phase, also known as soil solution P turnover, is essential for describing the kinetics of bioavailable P. While soil solution P turnover (Km) can be determined by tracing radioisotopes in a soil–solution system, few studies have done so. We believe that this is due to a lack of understanding on how to derive Km from isotopic exchange kinetic (IEK) experiments, a common form of radioisotope dilution study. Here, we provide a derivation of calculating Km using parameters obtained from IEK experiments. We then calculated Km for 217 soils from published IEK experiments in terrestrial ecosystems, and also that of 18 long-term P fertilizer field experiments. Analysis of the global compilation data set revealed a negative relationship between concentrations of soil solution P and Km. Furthermore, Km buffered isotopically exchangeable P in soils with low concentrations of soil solution P. This finding was supported by an analysis of long-term P fertilizer field experiments, which revealed a negative relationship between Km and phosphate-buffering capacity. Our study highlights the importance of calculating Km for understanding the kinetics of P between the soil solid and solution phases where it is bioavailable. We argue that our derivation can also be used to calculate soil solution turnover of other environmentally relevant and strongly sorbing elements that can be traced with radioisotopes, such as zinc, cadmium, nickel, arsenic, and uranium.

Risk Attitude and Corporate Investment under Output Market Uncertainty: Evidence from The Mekong River Delta, Vietnam

2016 ◽  
pp. 59-70
Author(s):  
Ninh Le Khuong ◽  
Nghiem Le Tan ◽  
Tho Huynh Huu
Keyword(s):  
Negative Relationship ◽  
Risk Attitude ◽  
Business Strategies ◽  
Risk Averse ◽  
Market Uncertainty ◽  
Firm Investment ◽  
Output Market ◽  
The Impact ◽  
The Relationship

This paper aims to detect the impact of firm managers’ risk attitude on the relationship between the degree of output market uncertainty and firm investment. The findings show that there is a negative relationship between these two aspects for risk-averse managers while there is a positive relationship for risk-loving ones, since they have different utility functions. Based on the findings, this paper proposes recommendations for firm managers to take into account when making investment decisions and long-term business strategies as well.

Eliciting Risk Preferences and Elasticity of Substitution

2020 ◽  
Vol 17 (4) ◽  
pp. 314-329
Author(s):  
Johan Burgaard ◽  
Mogens Steffensen
Keyword(s):  
Risk Aversion ◽  
Discount Rate ◽  
Predictive Power ◽  
Recursive Utility ◽  
Risk Averse ◽  
Indirect Utility ◽  
Consistent Estimation ◽  
On Certainty ◽  
Certainty Equivalents ◽  
Elasticity Of Intertemporal Substitution

Risk aversion and elasticity of intertemporal substitution (EIS) are separated via the celebrated recursive utility building on certainty equivalents of indirect utility. Based on an alternative separation method, we formulate a questionnaire for simultaneous and consistent estimation of risk aversion, subjective discount rate, and EIS. From a representative group of 1,153 respondents, we estimate parameters for these preferences and their variability within the population. Risk aversion and the subjective discount rate are found to be in the orders of 2 and 0, respectively, not diverging far away from results from other studies. Our estimate of EIS in the order of 10 is larger than often reported. Background variables like age and income have little predictive power for the three estimates. Only gender has a significant influence on risk aversion in the usually perceived direction that females are more risk-averse than males. Using individual estimates of preference parameters, we find covariance between preferences toward risk and EIS. We present the background reasoning on objectives, the questionnaire, a statistical analysis of the results, and economic interpretations of these, including relations to the literature.

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