Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education
AbstractWe study the determinants of individual attitudes towards risk and,in particular,why some individuals exhibit extremely high risk aversion. Using data from the Panel Study of Income Dynamics we find that policy induced increases in high school graduation rates lead to significantly fewer individuals being highly risk averse in the next generation. Other significant determinants of risk aversion are age, sex, and parents' risk aversion. We verify that risk aversion matters for economic behavior in that it predicts individuals' volatility of income.
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Bibliographic InfoPaper provided by University of Alberta, Department of Economics in its series Working Papers with number 2011-2.
Length: 51 pages
Date of creation: 01 Jan 2011
Date of revision:
schooling reforms; risk attitudes; intergenerational persistence;
Other versions of this item:
- Dmytro Hryshko & María José Luengo‐Prado & Bent E. Sørensen, 2011. "Childhood determinants of risk aversion: The long shadow of compulsory education," Quantitative Economics, Econometric Society, vol. 2(1), pages 37-72, 03.
- Hryshko, Dmytro & Luengo-Prado, Maria Jose & Sorensen, Bent E, 2010. "Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education," CEPR Discussion Papers 7999, C.E.P.R. Discussion Papers.
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- I29 - Health, Education, and Welfare - - Education - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-30 (All new papers)
- NEP-CBE-2011-01-30 (Cognitive & Behavioural Economics)
- NEP-LAB-2011-01-30 (Labour Economics)
- NEP-UPT-2011-01-30 (Utility Models & Prospect Theory)
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