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Risk Aversion And Entrepreneurship: New Evidence Exploiting Exposure To Massive Earthquakes In Italy

Author

Listed:
  • Giudo De Blasio

    (Banca d’Italia, Direzione Generale per l'Economia, la Statistica e la Ricerca)

  • Maria De Paola

    (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)

  • Vincenzo Scoppa

    (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)

  • Samuele Poy

    (Laboratorio di Statistica Applicata alle decisioni economico-aziendali, Università Cattolica del Sacro Cuore)

Abstract

This paper investigates the impact of risk attitudes on the decision to become an entrepreneur. In contrast to previous research, we handle endogeneity issues relying on an instrumental variables strategy considering as a source of exogenous variation in risk aversion the early exposure to a massive earthquake. Using several waves of the Bank of Italy Survey of Household Income and Wealth (SHIW), we find that individuals experimenting an earthquake become significantly more risk averse. Second-stage estimates show that risk aversion has a significant negative impact on the probability of becoming an entrepreneur.

Suggested Citation

  • Giudo De Blasio & Maria De Paola & Vincenzo Scoppa & Samuele Poy, 2019. "Risk Aversion And Entrepreneurship: New Evidence Exploiting Exposure To Massive Earthquakes In Italy," Working Papers 201901, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    • Handle: RePEc:clb:wpaper:201901
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    References listed on IDEAS

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    2. Daewoung Choi & Hyunju Shin & Kyoungmi Kim, 2023. "CEO’s Childhood Experience of Natural Disaster and CSR Activities," Journal of Business Ethics, Springer, vol. 188(2), pages 281-306, November.

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    More about this item

    Keywords

    Entrepreneurship; Risk Attitudes; Natural Disasters; Instrumental Variables;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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