Childhood determinants of risk aversion: The long shadow of compulsory education
AbstractWe study the determinants of individual attitudes towards risk and, in particular, why some individuals exhibit extremely high risk aversion. Using data from the Panel Study of Income Dynamics we find that a policy induced increase in high school graduation rates leads to significantly fewer individuals being highly risk averse in the next generation. Other significant determinants of risk aversion are age, sex, and parents' risk aversion. We verify that risk aversion matters for economic behavior in that it predicts individuals' volatility of income.
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Bibliographic InfoArticle provided by Econometric Society in its journal Quantitative Economics.
Volume (Year): 2 (2011)
Issue (Month): 1 (03)
Other versions of this item:
- Hryshko, Dmytro & Luengo-Prado, Maria Jose & Sorensen, Bent E, 2010. "Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education," CEPR Discussion Papers 7999, C.E.P.R. Discussion Papers.
- Hryshko, Dmytro & Luengo-Prado, Maria Jose & Sorensen, Bent, 2011. "Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education," Working Papers 2011-2, University of Alberta, Department of Economics.
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- I29 - Health, Education, and Welfare - - Education - - - Other
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