IDEAS home Printed from https://ideas.repec.org/a/taf/jriskr/v16y2013i7p861-878.html
   My bibliography  Save this article

Exploring risk attitude by a comparative experimental approach and its implication to disaster insurance practice in China

Author

Listed:
  • Tao Ye
  • Ming Wang

Abstract

This study employs the ordered lottery selection approach with field experiment to measure risk attitude of two distinct population groups in China -- farmers in Wuhan and freelancers in media and advertising in Beijing. A comparative design was used to reveal the cross-population difference in risk attitude and its affecting factors. The results showed that both groups exhibited constant partial risk aversion and decreasing absolute risk aversion, while the farmers were more risk-averse than the freelancers. The farmer and freelancer respondents demonstrated very different sensitivity to the warming-up games types involving 'gain-only' or 'gain-loss' while extremely risk-averse respondents in the warming-up games possessed the consistent attitudinal behavior in the formal tests. The comparative experiment revealed that gender and income were two statistically significant factors affecting risk attitude and they appeared to be consistent across the two distinct groups. Surprisingly, respondents' perceived frequency of risk occurrence was not correlated to their risk attitude. Moreover, the factors of leisure and investment behavior were significantly linked to the freelancers' risk attitude but not the farmers'. The experiment also found a non-linear relationship between risk attitude and education, and receiving college education was found to be a critical switching point that was significantly linked to respondents' risk choices. While further research is needed to better understand the governing mechanism in risk attitude, perception, and behavior, this paper tried to link the experimental results to the natural disaster insurance practice in China and discussed their implication to the policy design.

Suggested Citation

  • Tao Ye & Ming Wang, 2013. "Exploring risk attitude by a comparative experimental approach and its implication to disaster insurance practice in China," Journal of Risk Research, Taylor & Francis Journals, vol. 16(7), pages 861-878, August.
    • Handle: RePEc:taf:jriskr:v:16:y:2013:i:7:p:861-878
    DOI: 10.1080/13669877.2012.743159
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13669877.2012.743159
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13669877.2012.743159?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. van den Berg, Marrit & Fort, Ricardo & Burger, Kees, 2009. "Natural Hazards And Risk Aversion: Experimental Evidence From Latin America," 2009 Conference, August 16-22, 2009, Beijing, China 51394, International Association of Agricultural Economists.
    2. Arnaud Reynaud & Stéphane Couture, 2012. "Stability of risk preference measures: results from a field experiment on French farmers," Theory and Decision, Springer, vol. 73(2), pages 203-221, August.
    3. Helena Hansson & Carl Johan Lagerkvist, 2012. "Measuring farmers' preferences for risk: a domain-specific risk preference scale," Journal of Risk Research, Taylor & Francis Journals, vol. 15(7), pages 737-753, August.
    4. Gloede, Oliver & Menkhoff, Lukas & Waibel, Hermann, 2011. "Risk attitude and risk behavior: Comparing Thailand and Vietnam," Proceedings of the German Development Economics Conference, Berlin 2011 33, Verein für Socialpolitik, Research Committee Development Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mengmeng Qiang & Manhong Shen & Guanjun Xia, 2023. "The effectiveness of weather index insurance in managing mariculture production risk," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(2), pages 245-262, April.
    2. Ming Wang & Tao Ye & Peijun Shi, 2016. "Factors Affecting Farmers’ Crop Insurance Participation in China," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 479-492, September.
    3. Xilin Liu & Cheng Miao, 2021. "Analysis of the acceptable risk preferences of debris-flow disasters for three-category populations and their demographic characteristics in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 107(1), pages 971-990, May.
    4. Tao Ye & Yangbin Liu & Jiwei Wang & Ming Wang & Peijun Shi, 2017. "Farmers’ crop insurance perception and participation decisions: empirical evidence from Hunan, China," Journal of Risk Research, Taylor & Francis Journals, vol. 20(5), pages 664-677, May.
    5. Hao Guo & Yaoyao Wu & Yanrui Shang & Hao Yu & Jing’ai Wang, 2019. "Quantifying Farmers’ Initiatives and Capacity to Cope with Drought: A Case Study of Xinghe County in Semi-Arid China," Sustainability, MDPI, vol. 11(7), pages 1-19, March.
    6. J. Nicolas Hernandez-Aguilera & Max Mauerman & Alexandra Herrera & Kathryn Vasilaky & Walter Baethgen & Ana Maria Loboguerrero & Rahel Diro & Yohana Tesfamariam Tekeste & Daniel Osgood, 2020. "Games and Fieldwork in Agriculture: A Systematic Review of the 21st Century in Economics and Social Science," Games, MDPI, vol. 11(4), pages 1-22, October.
    7. Yaoyao Wu & Hao Guo & Jing’ai Wang, 2018. "Quantifying the Similarity in Perceptions of Multiple Stakeholders in Dingcheng, China, on Agricultural Drought Risk Governance," Sustainability, MDPI, vol. 10(9), pages 1-21, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chuang, Yating & Schechter, Laura, 2015. "Stability of experimental and survey measures of risk, time, and social preferences: A review and some new results," Journal of Development Economics, Elsevier, vol. 117(C), pages 151-170.
    2. Dragos, Cristian Mihai & Dragos, Simona Laura & Mare, Codruta & Muresan, Gabriela Mihaela & Purcel, Alexandra-Anca, 2023. "Does risk assessment and specific knowledge impact crop insurance underwriting? Evidence from Romanian farmers," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 343-358.
    3. Ranganathan, Kavitha & Lejarraga, Tomás, 2021. "Elicitation of risk preferences through satisficing," Journal of Behavioral and Experimental Finance, Elsevier, vol. 32(C).
    4. Bocqueho, Geraldine & Jacquet, Florence & Reynaud, Arnaud, 2011. "Expected Utility or Prospect Theory Maximizers? Results from a Structural Model based on Field-experiment Data," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114257, European Association of Agricultural Economists.
    5. Ndoye Niane, Aifa Fatimata & Burger, Kees, 2012. "Gender and Experimental Measurement of Producers Risk Attitude Towards Output Market Price and its Effects on Economic Performance," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126928, International Association of Agricultural Economists.
    6. Zubanov, Nick & Cadsby, Bram & Song, Fei, 2017. "The," IZA Discussion Papers 10542, Institute of Labor Economics (IZA).
    7. Caroline Roussy & Aude Ridier & Karim Chaïb, 2014. "Adoption d’innovations par les agriculteurs : rôle des perceptions et des préférences," Post-Print hal-01123427, HAL.
    8. Yanyan Ma & Xueyan Zhao, 2022. "What Affects the Livelihood Risk Coping Preferences of Smallholder Farmers? A Case Study from the Eastern Margin of the Qinghai-Tibet Plateau, China," Sustainability, MDPI, vol. 14(8), pages 1-17, April.
    9. KASHIWAGI Yuzuka & TODO Yasuyuki, 2022. "Trade Disruption and Risk Perception," Discussion papers 22086, Research Institute of Economy, Trade and Industry (RIETI).
    10. Luisa Menapace & Gregory Colson & Roberta Raffaelli, 2016. "A comparison of hypothetical risk attitude elicitation instruments for explaining farmer crop insurance purchases," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(1), pages 113-135.
    11. Bourdeau-Brien, Michael & Kryzanowski, Lawrence, 2020. "Natural disasters and risk aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 818-835.
    12. Keil, Alwin & Nielsen, Thea, 2012. "Accounting for farmers’ risk preferences in investigating land allocation decisions in marginal environments: a test of various elicitation measures in an application from Vietnam," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126054, International Association of Agricultural Economists.
    13. Hakelius, Karin & Hansson, Helena, 2016. "Members’ attitudes towards cooperatives and their perception of agency problems," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(4), October.
    14. Tao Ye & Yangbin Liu & Jiwei Wang & Ming Wang & Peijun Shi, 2017. "Farmers’ crop insurance perception and participation decisions: empirical evidence from Hunan, China," Journal of Risk Research, Taylor & Francis Journals, vol. 20(5), pages 664-677, May.
    15. Liu, Xianglin & Tang, Yingmei & Miranda, Mario J., 2015. "Does Past Experience in Natural Disasters Affect Willingness-to-Pay for Weather Index Insurance? Evidence from China," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205374, Agricultural and Applied Economics Association.
    16. Bauermeister, Golo & Musshoff, Oliver, 2016. "Risk Aversion and Inconsistencies - Does the Choice of Risk Elicitation Method and Display Format Influence the Outcomes?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235348, Agricultural and Applied Economics Association.
    17. Waweru, Caroline Waithira & Nyikal, Rose & Busienei, John R, 2017. "An Analysis Of Risk Attitudes And Risk Management Strategies Among Dairy Farmers In Murang’A County, Kenya," Dissertations and Theses 271063, University of Nairobi, Department of Agricultural Economics.
    18. Trestini, Samuel & Giampietri, Elisa & Smiglak-Krajewska, Magdalena, 2018. "Farmer behaviour towards the agricultural risk management tools provided by the CAP: a comparison between Italy and Poland," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 271978, European Association of Agricultural Economists.
    19. Samson P. Katengeza & Stein T. Holden & Rodney W. Lunduka, 2019. "Adoption of Drought Tolerant Maize Varieties under Rainfall Stress in Malawi," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(1), pages 198-214, February.
    20. Helena Hansson & Carl Johan Lagerkvist, 2014. "Decision Making for Animal Health and Welfare: Integrating Risk‐Benefit Analysis with Prospect Theory," Risk Analysis, John Wiley & Sons, vol. 34(6), pages 1149-1159, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jriskr:v:16:y:2013:i:7:p:861-878. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RJRR20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.