On the Sources of Risk Preferences in Rural Vietnam
AbstractIn this paper, I provide new empirical evidence that the natural environment can shape individual risk preferences. By combining historical data on weather variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, households highly affected by weather volatility show a longterm risk aversion and are more willing to buy insurance to protect crop losses. The finding also supports the hypothesis that when people are used to live in a risky environment, an incremental increase in risk affects their risk preferences less.
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Bibliographic InfoPaper provided by Australian National University, College of Business and Economics, School of Economics in its series ANU Working Papers in Economics and Econometrics with number 2012-593.
Length: 57 Pages
Date of creation: Oct 2012
Date of revision:
Find related papers by JEL classification:
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-11-03 (Agricultural Economics)
- NEP-ALL-2012-11-03 (All new papers)
- NEP-DEV-2012-11-03 (Development)
- NEP-EVO-2012-11-03 (Evolutionary Economics)
- NEP-HIS-2012-11-03 (Business, Economic & Financial History)
- NEP-IAS-2012-11-03 (Insurance Economics)
- NEP-SEA-2012-11-03 (South East Asia)
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