On a Simple Survey Measure of Individual Risk Aversion
AbstractWe ask individuals for their reservation price of a specified lotteryand deduce their Arrow-Pratt measure of risk aversion.This allows direct testing of common hypotheses on risk attitudes inthree datasets. We find that risk aversion indeed fallswith income and wealth. Entrepreneurs are less risk averse thanemployees, civil servants are more risk averse thanprivate sector employees, and women are more risk averse than men. Weanalyze six different specifications of the lotteryquestion in a single data set and find quite consistent results. Weconclude that a simple lottery question is a promisingsurvey instrument to extract differences in risk attitudes amongindividuals.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-074/3.
Date of creation: 29 Aug 2000
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Other versions of this item:
- Joop Hartog & Ada Ferrer-i-Carbonell & Nicole Jonker, 2000. "On a Simple Survey Measure of Individual Risk Aversion," CESifo Working Paper Series 363, CESifo Group Munich.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-10-23 (All new papers)
- NEP-FIN-2000-10-23 (Finance)
- NEP-IAS-2000-10-23 (Insurance Economics)
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