IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v169y2020icp301-313.html
   My bibliography  Save this article

Do actions speak louder than words? Comparing the effect of risk aversion on objective and self-reported mitigation measures

Author

Listed:
  • Champ, Patricia A.
  • Meldrum, James R.
  • Brenkert-Smith, Hannah
  • Warziniack, Travis W.
  • Barth, Christopher M.
  • Falk, Lilia C.
  • Gomez, Jamie B.

Abstract

In this article, we empirically examine whether the relationship between risk aversion and self-reported risk mitigating behavior is similar to the relationship between risk aversion and an objective measure of risk mitigating behavior. Despite higher levels of risk mitigation in the self-reported measure relative to the objective measure, we find risk aversion is similarly correlated with both measures of wildfire risk mitigation. These results provide some confidence in the use of self-reported behaviors in examinations of risk preferences and risky behaviors, even if the self-reports understate objective behavioral measures.

Suggested Citation

  • Champ, Patricia A. & Meldrum, James R. & Brenkert-Smith, Hannah & Warziniack, Travis W. & Barth, Christopher M. & Falk, Lilia C. & Gomez, Jamie B., 2020. "Do actions speak louder than words? Comparing the effect of risk aversion on objective and self-reported mitigation measures," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 301-313.
    • Handle: RePEc:eee:jeborg:v:169:y:2020:i:c:p:301-313
    DOI: 10.1016/j.jebo.2019.11.019
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268119303622
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2019.11.019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Max A. Moritz & Enric Batllori & Ross A. Bradstock & A. Malcolm Gill & John Handmer & Paul F. Hessburg & Justin Leonard & Sarah McCaffrey & Dennis C. Odion & Tania Schoennagel & Alexandra D. Syphard, 2014. "Learning to coexist with wildfire," Nature, Nature, vol. 515(7525), pages 58-66, November.
    2. Bartczak, Anna & Chilton, Susan & Meyerhoff, Jürgen, 2015. "Wildfires in Poland: The impact of risk preferences and loss aversion on environmental choices," Ecological Economics, Elsevier, vol. 116(C), pages 300-309.
    3. Travis Warziniack & Patricia Champ & James Meldrum & Hannah Brenkert-Smith & Christopher M. Barth & Lilia C. Falk, 2019. "Responding to Risky Neighbors: Testing for Spatial Spillover Effects for Defensible Space in a Fire-Prone WUI Community," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1023-1047, August.
    4. Kousky, Carolyn & Michel-Kerjan, Erwann O. & Raschky, Paul A., 2018. "Does federal disaster assistance crowd out flood insurance?," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 150-164.
    5. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    6. Eckel, Catherine C. & El-Gamal, Mahmoud A. & Wilson, Rick K., 2009. "Risk loving after the storm: A Bayesian-Network study of Hurricane Katrina evacuees," Journal of Economic Behavior & Organization, Elsevier, vol. 69(2), pages 110-124, February.
    7. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    8. Ingrid M. Martin & Holly Bender & Carol Raish, 2007. "What Motivates Individuals to Protect Themselves from Risks: The Case of Wildland Fires," Risk Analysis, John Wiley & Sons, vol. 27(4), pages 887-900, August.
    9. Daniel R. Petrolia & Joonghyun Hwang & Craig E. Landry & Keith H. Coble, 2015. "Wind Insurance and Mitigation in the Coastal Zone," Land Economics, University of Wisconsin Press, vol. 91(2), pages 272-295.
    10. Prante, Tyler & Little, Joseph M. & Jones, Michael L. & McKee, Michael & Berrens, Robert P., 2011. "Inducing private wildfire risk mitigation: Experimental investigation of measures on adjacent public lands," Journal of Forest Economics, Elsevier, vol. 17(4), pages 415-431.
    11. Magda Tsaneva, 2013. "The Effect of Risk Preferences on Household Use of Water Treatment," Journal of Development Studies, Taylor & Francis Journals, vol. 49(10), pages 1427-1435, October.
    12. Paul Raschky & Reimund Schwarze & Manijeh Schwindt & Ferdinand Zahn, 2013. "Uncertainty of Governmental Relief and the Crowding out of Flood Insurance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(2), pages 179-200, February.
    13. Matthew J. Wibbenmeyer & Michael S. Hand & David E. Calkin & Tyron J. Venn & Matthew P. Thompson, 2013. "Risk Preferences in Strategic Wildfire Decision Making: A Choice Experiment with U.S. Wildfire Managers," Risk Analysis, John Wiley & Sons, vol. 33(6), pages 1021-1037, June.
    14. Daniel R. Petrolia & Craig E. Landry & Keith H. Coble, 2013. "Risk Preferences, Risk Perceptions, and Flood Insurance," Land Economics, University of Wisconsin Press, vol. 89(2), pages 227-245.
    15. Charness, Gary & Gneezy, Uri & Imas, Alex, 2013. "Experimental methods: Eliciting risk preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 43-51.
    16. Lisa Cameron & Manisha Shah, 2015. "Risk-Taking Behavior in the Wake of Natural Disasters," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 484-515.
    17. Chie Hanaoka & Hitoshi Shigeoka & Yasutora Watanabe, 2018. "Do Risk Preferences Change? Evidence from the Great East Japan Earthquake," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 298-330, April.
    18. Coppola, Michela, 2014. "Eliciting risk-preferences in socio-economic surveys: How do different measures perform?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 48(C), pages 1-10.
    19. James R. Meldrum & Patricia A. Champ & Hannah Brenkert‐Smith & Travis Warziniack & Christopher M. Barth & Lilia C. Falk, 2015. "Understanding Gaps Between the Risk Perceptions of Wildland–Urban Interface (WUI) Residents and Wildfire Professionals," Risk Analysis, John Wiley & Sons, vol. 35(9), pages 1746-1761, September.
    20. Meraner, Manuela & Musshoff, Oliver & Finger, Robert, 2018. "Using involvement to reduce inconsistencies in risk preference elicitation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 73(C), pages 22-33.
    21. Osberghaus, Daniel, 2015. "The determinants of private flood mitigation measures in Germany — Evidence from a nationwide survey," Ecological Economics, Elsevier, vol. 110(C), pages 36-50.
    22. Botzen, W.J.W. & van den Bergh, J.C.J.M., 2012. "Risk attitudes to low-probability climate change risks: WTP for flood insurance," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 151-166.
    23. Fisher, Robert J, 1993. "Social Desirability Bias and the Validity of Indirect Questioning," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 20(2), pages 303-315, September.
    24. Michael S. Hand & Matthew J. Wibbenmeyer & David E. Calkin & Matthew P. Thompson, 2015. "Risk Preferences, Probability Weighting, and Strategy Tradeoffs in Wildfire Management," Risk Analysis, John Wiley & Sons, vol. 35(10), pages 1876-1891, October.
    25. Daniel Hellerstein & Nathaniel Higgins & John Horowitz, 2013. "The predictive power of risk preference measures for farming decisions -super-†," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(5), pages 807-833, December.
    26. Ilona M. McNeill & Patrick D. Dunlop & Jonathan B. Heath & Timothy C. Skinner & David L. Morrison, 2013. "Expecting the Unexpected: Predicting Physiological and Psychological Wildfire Preparedness from Perceived Risk, Responsibility, and Obstacles," Risk Analysis, John Wiley & Sons, vol. 33(10), pages 1829-1843, October.
    27. Meri Davlasheridze & Qing Miao, 2019. "Does Governmental Assistance Affect Private Decisions to Insure? An Empirical Analysis of Flood Insurance Purchases," Land Economics, University of Wisconsin Press, vol. 95(1), pages 124-145.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jennifer Balch & Katherine Curtis & Jack DeWaard & Elizabeth Fussell & Kathryn McConnell & Kobie Price & Lise St. Denis & Stephan D. Whitaker, 2021. "Effects of Wildfire Destruction on Migration, Consumer Credit, and Financial Distress," Working Papers 21-29, Federal Reserve Bank of Cleveland.
    2. Matthew R. Auer, 2024. "Wildfire risk and insurance: research directions for policy scientists," Policy Sciences, Springer;Society of Policy Sciences, vol. 57(2), pages 459-484, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Asadul Islam & C. Matthew Leister & Minhaj Mahmud & Paul A. Raschky, 2020. "Natural disaster and risk-sharing behavior: Evidence from rural Bangladesh," Journal of Risk and Uncertainty, Springer, vol. 61(1), pages 67-99, August.
    2. Peter John Robinson & W. J. Wouter Botzen & Fujin Zhou, 2021. "An experimental study of charity hazard: The effect of risky and ambiguous government compensation on flood insurance demand," Journal of Risk and Uncertainty, Springer, vol. 63(3), pages 275-318, December.
    3. Robert Finger & David Wüpper & Chloe McCallum, 2023. "The (in)stability of farmer risk preferences," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(1), pages 155-167, February.
    4. Craig E. Landry & Dylan Turner & Daniel Petrolia, 2021. "Flood Insurance Market Penetration and Expectations of Disaster Assistance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 357-386, June.
    5. Goytom Abraha Kahsay & Daniel Osberghaus, 2018. "Storm Damage and Risk Preferences: Panel Evidence from Germany," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(1), pages 301-318, September.
    6. Andor, Mark A. & Osberghaus, Daniel & Simora, Michael, 2020. "Natural Disasters and Governmental Aid: Is there a Charity Hazard?," Ecological Economics, Elsevier, vol. 169(C).
    7. Sepahvand, Mohammad H & Shahbazian, Roujman & Bali Swain, Ranjula, 2018. "Does revolution change risk attitudes? Evidence from Burkina Faso," Working Paper Series 2019:2, Uppsala University, Department of Economics.
    8. Tianzhuo Liu & Huifang Jiao, 2018. "Insights into the Effects of Cognitive Factors and Risk Attitudes on Fire Risk Mitigation Behavior," Computational Economics, Springer;Society for Computational Economics, vol. 52(4), pages 1213-1232, December.
    9. Ginger Turner & Farah Said & Uzma Afzal, 2014. "Microinsurance Demand After a Rare Flood Event: Evidence From a Field Experiment in Pakistan," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(2), pages 201-223, April.
    10. Osberghaus, Daniel & Reif, Christiane, 2021. "How do different compensation schemes and loss experience affect insurance decisions? Experimental evidence from two independent and heterogeneous samples," Ecological Economics, Elsevier, vol. 187(C).
    11. Zack Dorner & Daniel A. Brent & Anke Leroux, 2019. "Preferences for Intrinsically Risky Attributes," Land Economics, University of Wisconsin Press, vol. 95(4), pages 494-514.
    12. Aragón, Fernando M. & Molina, Oswaldo & Outes-León, Ingo W., 2020. "Property rights and risk aversion: Evidence from a titling program," World Development, Elsevier, vol. 134(C).
    13. Dorner, Zach & Brent, Daniel A. & Leroux, Anke, 2016. "Eliciting Risk Preferences for Intrinsic Attributes," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236644, Agricultural and Applied Economics Association.
    14. Mensah, Edouard R. & Filipski, Mateusz J., 2022. "Saving for a rainy day: the impact of natural disasters on savings rates," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322266, Agricultural and Applied Economics Association.
    15. Sophie Massin & Antoine Nebout & Bruno Ventelou, 2018. "Predicting medical practices using various risk attitude measures," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(6), pages 843-860, July.
    16. 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.
    17. Stefan Borsky & Hannah Hennighausen, 2022. "Public Flood Risk Mitigation and the Homeowner’s Insurance Demand Response," Land Economics, University of Wisconsin Press, vol. 98(4), pages 537-559.
    18. Kettlewell, Nathan, 2019. "Risk preference dynamics around life events," Journal of Economic Behavior & Organization, Elsevier, vol. 162(C), pages 66-84.
    19. Beine, Michel & Charness, Gary & Dupuy, Arnaud & Joxhe, Majlinda, 2020. "Shaking Things Up: On the Stability of Risk and Time Preferences," IZA Discussion Papers 13084, Institute of Labor Economics (IZA).
    20. Mona Ahmadiani & Susana Ferreira & Craig E. Landry, 2019. "Flood Insurance and Risk Reduction: Market Penetration, Coverage, and Mitigation in Coastal North Carolina," Southern Economic Journal, John Wiley & Sons, vol. 85(4), pages 1058-1082, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:169:y:2020:i:c:p:301-313. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.