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.

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.

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.

scholarly journals Improved Rice Technology Adoption: The Role of Spatially-Dependent Risk Preference

Agriculture ◽  
2021 ◽  
Vol 11 (8) ◽  
pp. 691
Author(s):  
Omotuyole Isiaka Ambali ◽  
Francisco Jose Areal ◽  
Nikolaos Georgantzis
Keyword(s):  
Field Experiments ◽  
Climatic Factors ◽  
Risk Preferences ◽  
Risk Preference ◽  
Probit Model ◽  
Climatic Conditions ◽  
High Yield ◽  
Risk Attitudes ◽  
Policy Action ◽  
Rice Varieties

This study analyses farmers’ adoption of improved rice technology, taking into account farmers’ risk preferences; the unobserved spatial heterogeneity associated with farmers’ risk preferences; farmers’ household and farm characteristics; farm locations, farmers’ access to information, and their perceptions on the rice improved varieties (i.e., high yield varieties, HYV). The study used data obtained from field experiments and a survey conducted in 2016 in Nigeria. An instrumental-variable probit model was estimated to account for potential endogenous farmers’ risk preference in the adoption decision model. Results show that risk averse (risk avoidant) farmers are less likely to adopt HYV, with the spatial lags of farmers’ risk attitudes found to be a good instrument for spatially unobserved variables (e.g., environmental and climatic factors). We conclude that studies supporting policy action aiming at the diffusion of improved rice varieties need to collect information, if possible, on farmers’ risk attitudes, local environmental and climatic conditions (e.g., climatic, topographic, soil quality, pest incidence) in order to ease the design and evaluation of policy actions on the adoption of improved agricultural technology.

Impacts of socio-psychological factors on smallholder farmers’ risk attitudes: empirical evidence and implications

Agrekon ◽  
2019 ◽  
Vol 58 (2) ◽  
pp. 253-279 ◽  
Author(s):  
Woldegebrial Zeweld ◽  
Guido Van Huylenbroeck ◽  
Girmay Tesfay ◽  
Stijn Speelman
Keyword(s):  
Empirical Evidence ◽  
Psychological Factors ◽  
Smallholder Farmers ◽  
Risk Attitudes

Conclusion, 11 Concluding Remarks on the Theoretical, Legal, and Practical Challenges of European Antitrust Criminalization

2014 ◽  
Author(s):  
Whelan Peter
Keyword(s):  
Risk Aversion ◽  
Empirical Evidence ◽  
Cultural Sensitivity ◽  
Information Exchange ◽  
Quantitative Research ◽  
Empirical Studies ◽  
Deterrence Theory ◽  
Eu Member States ◽  
Research Questions ◽  
Rationality Assumption

This concluding chapter provides final remarks on the theoretical, legal, and practical challenges of European antitrust criminalization. It also determines five different research questions that should be addressed by future researchers. First, more detailed, reliable empirical evidence on the motivations of cartelists and whether or not they act in accordance with the rationality assumption of deterrence theory is required. Second, detailed qualitative and quantitative research concerning the usefulness of information exchange within the European Competition Network (ECN) would also be useful. Third, empirical evidence should be generated concerning whether consumers actually assume that their suppliers are not engaged in cartel activity with their competitors. Fourth, empirical studies on the extent to which risk aversion is a characteristic of corporate entities need to be pursued. Finally, empirical evidence on the cultural sensitivity of perceptions of cartel activity among the citizens of the different EU Member States would be welcome.

scholarly journals Right-to-Choose Auctions: A Field Study of Water Markets in the Limari Valley of Chile

2010 ◽  
Vol 39 (2) ◽  
pp. 213-226 ◽  
Author(s):  
Jonathan E. Alevy ◽  
Oscar Cristi ◽  
Oscar Melo
Keyword(s):  
Field Study ◽  
Research Team ◽  
Field Experiments ◽  
Time Preferences ◽  
Water Markets ◽  
Risk Attitudes ◽  
Sequential Auction ◽  
The Difference ◽  
Water Volumes ◽  
The Right

Field experiments were conducted with farmers in the Limari Valley of Chile to test extant theory on right-to-choose auctions. Water volumes that differed by reservoir source and time of availability were offered for sale by the research team. The auctions were supplemented by protocols to elicit risk and time preferences of bidders. We find that the right-to-choose auctions raise significantly more revenue than the benchmark sequential auction. Risk attitudes explain a substantial amount of the difference in bidding between auction institutions, consonant with received theory. The auction bidding revealed distinct preferences for water types, which has implications for market re-design.

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

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