On a Simple Survey Measure of Individual Risk Aversion
AbstractWe ask individuals for their reservation price of a specified lottery and deduce their Arrow-Pratt measure of risk aversion. This allows direct testing of common hy-poth-eses on risk atti-tudes in three datasets. We find that risk aversion indeed falls with income and wealth. Entre-preneurs are less risk averse than employees, civil servants are more risk averse than private sector employees, and women are more risk averse than men. We analyze six different specifications of the lottery question in a single data set and find quite consistent results. We conclude that a simple lottery ques-tion is a promising survey in-strument to extract differ-ences in risk attitudes among individuals.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 363.
Date of creation: 2000
Date of revision:
Other versions of this item:
- Joop Hartog & Ada Ferrer-i-Carbonell & Nicole Jonker, 2000. "On a Simple Survey Measure of Individual Risk Aversion," Tinbergen Institute Discussion Papers 00-074/3, Tinbergen Institute.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
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