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Can public policies change risk preferences? The effect of property titling on risk aversion

Author

Listed:
  • Fernando M. Aragon

    (Simon Fraser University)

  • Oswaldo Molina

    (Universidad del Pacifico)

  • Ingo W. Outes-Leon

    (Oxford University)

Abstract

Evidence suggests that major events, like war or natural disasters, affect risk preferences. This paper shows that similar effects can also be caused by public policies. Using the case of a large titling program in Peru, we find that this policy reduced risk aversion. The effects are sizeable and seem to be driven by the reduction in background risk associated with improved security of tenure. Our results highlight the potential of public policies to affect human behavior not only by shaping the economic environment, but also by changing individual preferences.

Suggested Citation

  • Fernando M. Aragon & Oswaldo Molina & Ingo W. Outes-Leon, 2017. "Can public policies change risk preferences? The effect of property titling on risk aversion," Discussion Papers dp17-09, Department of Economics, Simon Fraser University.
    • Handle: RePEc:sfu:sfudps:dp17-09
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    References listed on IDEAS

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    Cited by:

    1. Martina Bozzola & Robert Finger, 2021. "Stability of risk attitude, agricultural policies and production shocks: evidence from Italy," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(3), pages 477-501.
    2. Oswaldo Molina & Mans Söderbom, 2018. "Heterogeneous Effects of Property Rights on Housing Investment in Urban Peru," Working Papers 119, Peruvian Economic Association.

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