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Does Education Increase Risk Aversion? Evidence Using Artefactual Experiments in Peru

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  • Alberto Chong

    (Department of Economics, Andrew Young School of Policy Studies, Georgia State University, USA)

  • Joan J. Martínez

    (University of California, Berkeley, USA)

Abstract

We provide empirical evidence that supports a causal link from education to risk aversion when using representative data from representative surveys and artefactual or lab-in-the field experiments in Lima, Peru. We employ three standard experimental measures of risk aversion and find that each of them is positively correlated with years of education. We suggest that this relationship may be causal as we take advantage of an identification strategy that exploits a national law enacted in order to incentivize the construction of new schools in Lima, which allows us to provide evidence that more education may increase risk aversion. Our findings are further confirmed when applying a broad set of robustness tests.

Suggested Citation

  • Alberto Chong & Joan J. Martínez, 2019. "Does Education Increase Risk Aversion? Evidence Using Artefactual Experiments in Peru," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1917, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1917
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    File URL: https://icepp.gsu.edu/files/2019/09/paper1917.pdf
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    Cited by:

    1. Basu, Arnab K. & Dimova, Ralitza, 2021. "Household Preferences and Child Labor in Rural Ethiopia," IZA Discussion Papers 14062, Institute of Labor Economics (IZA).

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