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Assortative mating on risk attitude

Author

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  • Philomena Bacon
  • Anna Conte
  • Peter Moffatt

Abstract

Spousal correlation in risk attitude is estimated using data from the German Socio-Economic Panel over the period 2004–2009. We apply the bivariate panel ordered probit model to the analysis of the simultaneous determination of the male’s and the female’s risk attitude, using the survey question about general willingness to take risk, provided on a 0–10 Likert-scale. The correlations between both the individual-specific effects of the two partners and the two within-individual errors are separately estimated, and found to be +0.285 and +0.310, respectively. We consider the former to be a key parameter, since its positive sign may be interpreted in terms of positive assortative mating on risk attitude: individuals tend to form partnerships with others having a similar risk attitude. We also find evidence that this correlation increases with years of marriage, suggesting either a form of spousal socialization or a selection process in which marriage breakdown is more likely in poorly matched couples. Copyright The Author(s) 2014

Suggested Citation

  • Philomena Bacon & Anna Conte & Peter Moffatt, 2014. "Assortative mating on risk attitude," Theory and Decision, Springer, vol. 77(3), pages 389-401, October.
    • Handle: RePEc:kap:theord:v:77:y:2014:i:3:p:389-401
    DOI: 10.1007/s11238-014-9448-x
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    Citations

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    Cited by:

    1. Christoph Engel & Alexandra Fedorets & Olga Gorelkina, 2018. "How Do Households Allocate Risk?," SOEPpapers on Multidisciplinary Panel Data Research 1000, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Volland, Benjamin, 2017. "The role of risk and trust attitudes in explaining residential energy demand: Evidence from the United Kingdom," Ecological Economics, Elsevier, vol. 132(C), pages 14-30.
    3. Keith A. Bender & Colin P. Green & John S. Heywood, 2021. "Performance pay and assortative matching," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 485-493, September.
    4. Yang, Xiaojun & Carlsson, Fredrik, 2021. "Are People More Patient with Their Spouse's Money? An Experimental Study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 94(C).
    5. Ranoua Bouchouicha & Ferdinand M. Vieider, 2019. "Growth, entrepreneurship, and risk-tolerance: a risk-income paradox," Journal of Economic Growth, Springer, vol. 24(3), pages 257-282, September.
    6. Aldy, Joseph, 2019. "Birds of a Feather: Estimating the Value of Statistical Life from Dual-Earner Families," Working Paper Series rwp19-013, Harvard University, John F. Kennedy School of Government.
    7. Kokot, Johanna, 2017. "Does a spouse's health shock influence the partner's risk attitudes?," Ruhr Economic Papers 707, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Joseph E. Aldy, 2019. "Birds of a feather: Estimating the value of statistical life from dual-earner families," Journal of Risk and Uncertainty, Springer, vol. 58(2), pages 187-205, June.
    9. Dahmann, Sarah C. & Kettlewell, Nathan & Lam, Jack, 2022. "Parental Separation and the Formation of Economic Preferences," IZA Discussion Papers 14993, Institute of Labor Economics (IZA).
    10. Fischbacher, Urs & Neyse, Levent & Richter, David & Schröder, Carsten, 2022. "Adding household surveys to the behavioral economics toolbox: Insights from the SOEP Innovation Sample," Discussion Papers, Research Unit: Market Behavior SP II 2022-201, WZB Berlin Social Science Center.
    11. Thomas Meissner & Xavier Gassmann & Corinne Faure & Joachim Schleich, 2023. "Individual characteristics associated with risk and time preferences: A multi country representative survey," Journal of Risk and Uncertainty, Springer, vol. 66(1), pages 77-107, February.
    12. Li, Sanxi & Sun, Hailin & Wang, Tong & Yu, Jun, 2016. "Assortative matching and risk sharing," Journal of Economic Theory, Elsevier, vol. 163(C), pages 248-275.
    13. Salvatore Di Falco & Ferdinand M. Vieider, 2018. "Assimilation In The Risk Preferences Of Spouses," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1809-1816, July.
    14. Joseph E. Aldy, 2019. "Birds of a Feather: Estimating the Value of Statistical Life from Dual-Earner Families," NBER Working Papers 25708, National Bureau of Economic Research, Inc.
    15. Matthew Gnagey & Therese Grijalva & Rong Rong, 2020. "Spousal influence and assortative mating on time preferences: a field experiment in the USA," Review of Economics of the Household, Springer, vol. 18(2), pages 461-512, June.
    16. Aristidis K. Nikoloulopoulos & Peter G. Moffatt, 2019. "Coupling Couples With Copulas: Analysis Of Assortative Matching On Risk Attitude," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 654-666, January.

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    More about this item

    Keywords

    Multiple equation models; Ordinal data; Panel data; Risk attitude; Assortative mating; Spousal correlation; Homophily; C33; D81;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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