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Risk attitudes, development, and growth: Macroeconomic evidence from experiments in 30 countries

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  • Vieider, Ferdinand M.
  • Chmura, Thorsten
  • Martinsson, Peter

Abstract

We measure risk attitudes in 30 different countries in a controlled, incentivized experiment (N = 3025). At the macroeconomic level, we find a strong and highly significant negative correlation between the risk tolerance of a country and income per capita. This gives rise to a paradox, seen that risk tolerance has been found to be positively associated with personal income within countries. We show that this paradox can be explained by unified growth theory. These results are consistent with the prediction that risk attitudes act as a transmission mechanism for growth by encouraging entrepreneurship. Furthermore, our study shows that risk attitudes vary considerably between countries and that for typical experimental stakes, risk seeking or neutrality is just as frequent as risk aversion. --

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, WZB Junior Research Group Risk and Development with number SP II 2012-401.

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Date of creation: 2012
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Handle: RePEc:zbw:wzbrad:spii2012401

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Keywords: risk attitudes; cultural comparison; economic growth; comparative development;

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Cited by:
  1. Moritz Heß & Christian von Scheve & Jürgen Schupp & Gert G. Wagner, 2013. "Members of German Federal Parliament More Risk-Loving than General Population," SOEPpapers on Multidisciplinary Panel Data Research 546, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Bruno Martorano & Sudhanshu Handa & Carolyn Halpern & Harsha Thirumurthy & UNICEF Innocenti Research Centre, 2014. "Subjective Well-being, Risk Perceptions and Time Discounting: Evidence from a large-scale cash transfer programme," Innocenti Working Papers inwopa717, UNICEF Innocenti Research Centre.
  3. Vieider, Ferdinand M. & Lefebvre, Mathieu & Bouchouicha, Ranoua & Chmura, Thorsten & Hakimov, Rustamdjan & Krawczyk, Michal & Martinsson, Peter, 2013. "Common components of risk and uncertainty attitudes across contexts and domains: Evidence from 30 countries," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-402, Social Science Research Center Berlin (WZB).
  4. Vieider, Ferdinand M. & Truong, Nghi & Martinsson, Peter & Pham Khanh Nam & Martinsson, Peter, 2013. "Risk preferences and development revisited: A field experiment in Vietnam," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-403, Social Science Research Center Berlin (WZB).

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