scholarly journals Adolescents' attitudes to risk and their employment sector choices in adulthood: Evidence from longitudinal data

2020 ◽  
Vol 70 (1) ◽  
pp. 105-121
Author(s):  
Yen-Ling Lin
Keyword(s):  
Longitudinal Data ◽  
Risk Aversion ◽  
Risk Taking ◽  
Logit Model ◽  
Three Dimensional ◽  
Inverse Function ◽  
Relative Risk Aversion ◽  
Background Characteristics ◽  
Employment Sector ◽  
Employment Choices

AbstractI investigated the effects of adolescents' attitudes toward risk on their choice of employment sector in adulthood. I employed a joint model of employment sector choice and three-dimensional background characteristics to demonstrate that employment preference is an inverse function of the degree of relative risk aversion. Empirical data was obtained from longitudinal data, and a logit model was applied to estimate the effects of the three-dimensional background characteristics on the risk-taking attitudes and employment choices. I observed that individuals with a higher tendency to engage in risky experiences exhibit low risk aversion, and thus, tend to choose a riskier employment sector.

A Simplified Measure of Investor Risk Aversion

2020 ◽  
pp. 026010792092451
Author(s):  
John Grable ◽  
Eun Jin Kwak ◽  
Martha Fulk ◽  
Aditi Routh
Keyword(s):  
United States ◽  
Relative Risk ◽  
Risk Aversion ◽  
Risk Taking ◽  
Measurement Techniques ◽  
Revealed Preference ◽  
The United States ◽  
Relative Risk Aversion ◽  
Measures Of Risk ◽  
Constant Relative Risk Aversion

This article introduces a simplified measure of investor risk aversion. The singleitem question combines elements from revealed preference and propensity measurement techniques in a way that matches traditional constant relative risk-aversion estimation procedures. Based on survey data from 500 investors living in the United States, scores from the proposed measure were found to correlate with other measures of risk aversion, as well as with indicators of risk-taking. A validity test showed that answers to the proposed measure were statistically associated with equity and cash ownership holdings in respondent portfolios. The simplicity and intuitive nature of the proposed measure and the alignment of question response categories to estimates of constant relative risk aversion make this a potentially valuable addition to the toolkit of researchers, financial educators, investors and those who provide advice to investors. JEL: C83, D10, D11, D14, D19, D81

Relative Risk Aversion and Portfolio Choice

2005 ◽  
Author(s):  
Pablo Muñoz Ceballos ◽  
Esteban Flores Díaz
Keyword(s):  
Relative Risk ◽  
Risk Aversion ◽  
Portfolio Choice ◽  
Relative Risk Aversion

scholarly journals Relative risk aversion models: How plausible are their assumptions?

2021 ◽  
pp. 104346312199408
Author(s):  
Carlo Barone ◽  
Katherin Barg ◽  
Mathieu Ichou
Keyword(s):  
Relative Risk ◽  
Risk Aversion ◽  
Loss Aversion ◽  
Educational Inequality ◽  
Risky Choice ◽  
Relative Risk Aversion ◽  
Downward Mobility ◽  
Educational Decisions ◽  
Empirically Supported ◽  
Occupational Risks

This work examines the validity of the two main assumptions of relative risk-aversion models of educational inequality. We compare the Breen-Goldthorpe (BG) and the Breen-Yaish (BY) models in terms of their assumptions about status maintenance motives and beliefs about the occupational risks associated with educational decisions. Concerning the first assumption, our contribution is threefold. First, we criticise the assumption of the BG model that families aim only at avoiding downward mobility and are insensitive to the prospects of upward mobility. We argue that the loss-aversion assumption proposed by BY is a more realistic formulation of status-maintenance motives. Second, we propose and implement a novel empirical approach to assess the validity of the loss-aversion assumption. Third, we present empirical results based on a sample of families of lower secondary school leavers indicating that families are sensitive to the prospects of both upward and downward mobility, and that the loss-aversion hypothesis of BY is empirically supported. As regards the risky choice assumption, we argue that families may not believe that more ambitious educational options entail occupational risks relative to less ambitious ones. We present empirical evidence indicating that, in France, the academic path is not perceived as a risky option. We conclude that, if the restrictive assumptions of the BG model are removed, relative-risk aversion needs not drive educational inequalities.

scholarly journals The Burden of the Nondiversifiable Risk of Entrepreneurship

2010 ◽  
Vol 100 (3) ◽  
pp. 1163-1194 ◽  
Author(s):  
Robert E Hall ◽  
Susan E Woodward
Keyword(s):  
Relative Risk ◽  
Risk Aversion ◽  
Venture Capital ◽  
Dynamic Program ◽  
Certainty Equivalent ◽  
Important Class ◽  
Relative Risk Aversion ◽  
The Past ◽  
Equity Value ◽  
The Difference

Entrepreneurship is risky. We study the risk facing a well-documented and important class of entrepreneurs, those backed by venture capital. Using a dynamic program, we calculate the certainty-equivalent of the difference between the cash rewards that entrepreneurs actually received over the past 20 years and the cash that entrepreneurs would have received from a risk-free salaried job. The payoff to a venture-backed entrepreneur comprises a below-market salary and a share of the equity value of the company when it goes public or is acquired. We find that the typical venture-backed entrepreneur received an average of $5.8 million in exit cash. Almost three-quarters of entrepreneurs receive nothing at exit and a few receive over a billion dollars. Because of the extreme dispersion of payoffs, an entrepreneur with a coefficient of relative risk aversion of two places a certainty equivalent value only slightly greater than zero on the distribution of outcomes she faces at the time of her company's launch. (JEL G24, G32, L26, M13)

Relative Risk Aversion Revisited

1982 ◽  
Vol 64 (3) ◽  
pp. 481 ◽  
Author(s):  
Frederick W. Siegel ◽  
James P. Hoban
Keyword(s):  
Relative Risk ◽  
Risk Aversion ◽  
Relative Risk Aversion
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