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Shaking Things Up: On the Stability of Risk and Time preferences

Author

Listed:
  • Michel Beine

    (Department of Economics and Management, Université du Luxembourg)

  • Gary Charness

    (Department of Economics, University of California, Santa Barbara, USA)

  • Anaud Dupuy

    (Department of Economics and Management, Université du Luxembourg)

  • Majlinda Joxhe

    (Department of Economics and Management, Université du Luxembourg)

Abstract

We conduct a survey and incentivized lab-in-the-field experimental tasks in Tirana, Albania. While the original purpose of our study was to examine whether and how deep parameters such as time and risk preferences affect the intention to migrate, our study was transformed into a natural experiment owing to two large earthquakes that shook the Tirana area during our data-collection period. These events provide us with a rare opportunity to gather evidence (including a pre-earthquake control) on the effect of natural disasters on time and risk preferences. We find unambiguous effects towards more risk aversion and impatience for affected individuals. Moreover, as it turns out, the second earthquake amplified the effect of the first one, suggesting that experiences cumulate in their influence on these preferences.

Suggested Citation

  • Michel Beine & Gary Charness & Anaud Dupuy & Majlinda Joxhe, 2020. "Shaking Things Up: On the Stability of Risk and Time preferences," DEM Discussion Paper Series 20-09, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:20-09
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    Cited by:

    1. Michel Beine & Gary Charness & Arnaud Dupuy, 2021. "Emigration Intentions and Risk Aversion: Causal Evidence from Albania," CESifo Working Paper Series 9484, CESifo.
    2. Blumenstock, Joshua & Callen, Mike & Ghani, Tarek & González, Roberto, 2024. "Violence and financial decisions: evidence from mobile money in Afghanistan," LSE Research Online Documents on Economics 117303, London School of Economics and Political Science, LSE Library.
    3. Adam Rose, 2022. "Behavioral Economic Consequences of Disasters: A Basis for Inclusion in Benefit–Cost Analysis," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 213-233, July.
    4. Freitas-Monteiro, Teresa & Ludolph, Lars, 2021. "Barriers to humanitarian migration, victimisation and integration outcomes: evidence from Germany," LSE Research Online Documents on Economics 110500, London School of Economics and Political Science, LSE Library.
    5. repec:cup:judgdm:v:17:y:2022:i:4:p:745-767 is not listed on IDEAS
    6. Chevalier, Arnaud & Marie, Olivier, 2024. "Risky moms, risky kids? fertility and crime after the fall of the wall," Journal of Public Economics, Elsevier, vol. 230(C).
    7. Gary Charness & Nir Chemaya & Dario Trujano-Ochoa, 2023. "Learning your own risk preferences," Journal of Risk and Uncertainty, Springer, vol. 67(1), pages 1-19, August.
    8. Olivia S. Mitchell, 2020. "Building Better Retirement Systems in the Wake of the Global Pandemic," NBER Working Papers 27261, National Bureau of Economic Research, Inc.
    9. Bokern, Paul & Linde, Jona & Riedl, Arno & Werner, Peter, 2023. "The robustness of preferences during a crisis: The case of COVID-19," Research Memorandum 012, Maastricht University, Graduate School of Business and Economics (GSBE).
    10. Preuss, Malte, 2021. "Intra-individual stability of two survey measures on forward-looking attitude," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 201-227.
    11. Tatarnikova, Olga & Duchêne, Sébastien & Sentis, Patrick & Willinger, Marc, 2023. "Portfolio instability and socially responsible investment: Experiments with financial professionals and students," Journal of Economic Dynamics and Control, Elsevier, vol. 153(C).
    12. Andreas C. Drichoutis & Rodolfo M. Nayga, 2022. "On the stability of risk and time preferences amid the COVID-19 pandemic," Experimental Economics, Springer;Economic Science Association, vol. 25(3), pages 759-794, June.
    13. repec:jdm:journl:v:17:y:2022:i:4:p:745-767 is not listed on IDEAS
    14. Sommervoll, Dag Einar & Holden, Stein T. & Tilahun, Mesfin, 2023. "Intertemporal Choice Lists and Maximal Likelihood Estimation of Discount Rates," CLTS Working Papers 9/23, Norwegian University of Life Sciences, Centre for Land Tenure Studies.
    15. Pierre-Guillaume Méon & Robin Rampaer & David Raymaekers, 2021. "One-minute earthquake, years of patience: Evidence from Mexico on the effect of earthquake exposure on time preference," Working Papers CEB 21-015, ULB -- Universite Libre de Bruxelles.
    16. Michel Beine & Arnaud Dupuy & Majlinda Joxhe, 2020. "Migration intentions: Data from a Field Study in Albania," DEM Discussion Paper Series 20-14, Department of Economics at the University of Luxembourg.
    17. Ksenia V. Rozhkova & Natalya Yemelina & Sergey Yu. Roshchin, 2021. "Can Non-Cognitive Skills Explain The Gender Wage Gap In Russia? An Unconditional Quantile Regression Approach," HSE Working papers WP BRP 252/EC/2021, National Research University Higher School of Economics.
    18. Shachat, Jason & Walker, Matthew J. & Wei, Lijia, 2021. "How the onset of the Covid-19 pandemic impacted pro-social behaviour and individual preferences: Experimental evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 480-494.
    19. Bu, Di & Hanspal, Tobin & Liao, Yin & Liu, Yong, 2021. "Risk taking, preferences, and beliefs: Evidence from Wuhan," SAFE Working Paper Series 301, Leibniz Institute for Financial Research SAFE.
    20. Anwesha Bandyopadhyay & Lutfunnahar Begum & Philip J. Grossman, 2021. "Gender differences in the stability of risk attitudes," Journal of Risk and Uncertainty, Springer, vol. 63(2), pages 169-201, October.
    21. Abdelaziz Alsharawy & Sheryl Ball & Alec Smith & Ross Spoon, 2021. "Fear of COVID-19 changes economic preferences: evidence from a repeated cross-sectional MTurk survey," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 7(2), pages 103-119, December.

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    More about this item

    Keywords

    Time preferences; risk preferences; natural disaster; Albania; migration;
    All these keywords.

    JEL classification:

    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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