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School environment and risk preferences: Experimental evidence

Author

Listed:
  • Catherine Eckel
  • Philip Grossman
  • Cathleen Johnson
  • Angela Oliveira
  • Christian Rojas
  • Rick Wilson

Abstract

Using a field experiment with high school students, we evaluate the development of risk preferences. Examining the impact of school characteristics on preference development reveals both peer and quality effects. For the peer effect, individuals in schools with a higher percentage of students on free or reduced lunches (hence a higher proportion of low-income peers with whom to interact) are significantly more risk averse. For the quality effect, individuals in schools with smaller class sizes and a higher percentage of educators with advanced degrees have higher, more moderate levels of risk aversion. We further discuss economic, cognitive and emotional development theories of risk preferences. Data show demographic-related patterns: girls are more risk averse on average, while taller and nonwhite individuals are more risk tolerant. Copyright Springer Science+Business Media New York 2012

Suggested Citation

  • Catherine Eckel & Philip Grossman & Cathleen Johnson & Angela Oliveira & Christian Rojas & Rick Wilson, 2012. "School environment and risk preferences: Experimental evidence," Journal of Risk and Uncertainty, Springer, vol. 45(3), pages 265-292, December.
    • Handle: RePEc:kap:jrisku:v:45:y:2012:i:3:p:265-292
    DOI: 10.1007/s11166-012-9156-2
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    More about this item

    Keywords

    Risk aversion; School effects; Development of preferences; D81; C93;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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