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Risk-Averse by Nation or by Religion?: Some Insights on the Determinants of Individual Risk Attitudes

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  • Stephan Bartke
  • Reimund Schwarze

Abstract

Research findings have proven that the willingness to take risks is distributed heterogeneously among individuals. In the general public, there is a widely held notion that individuals of certain nationalities tend to hold certain typical risk preferences. Furthermore, religious beliefs are thought to explain differences in risk-preparedness on the individual level. We analyze these two possible determinants of individual risk attitudes: nationality and religion. First addressing the study of risk attitudes in a literature review, we then test our hypotheses empirically using the large, representative German Socio-Economic Panel (SOEP). To understand the importance of nationality, we focus on emigrants to Germany. The key findings are: (1) Nationality is not a valid determinant of risk attitudes. It can be broken down into several constituent factors including religion. (2) Religiousness is a significant determinant of risk attitudes. Religious persons are less risk-tolerant than atheists. Moreover, religious affiliation matters: Muslims are less risk-tolerant than Christians.

Suggested Citation

  • Stephan Bartke & Reimund Schwarze, 2008. "Risk-Averse by Nation or by Religion?: Some Insights on the Determinants of Individual Risk Attitudes," SOEPpapers on Multidisciplinary Panel Data Research 131, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp131
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    References listed on IDEAS

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    Cited by:

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    2. Nielsen, Jytte Seested & Bech, Mickael & Christensen, Kaare & Kiil, Astrid & Hvidt, Niels Christian, 2017. "Risk aversion and religious behaviour: Analysis using a sample of Danish twins," Economics & Human Biology, Elsevier, vol. 26(C), pages 21-29.
    3. Martin Eling & Shailee Pradhan & Joan T Schmit, 2014. "The Determinants of Microinsurance Demand," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(2), pages 224-263, April.
    4. Dennis D. Fehrenbacher & Claudia R Schneider & Elke U. Weber, 2017. "Catch me if I fall: Cross-national differences in willingness to take financial risks as a function of social and state ‘cushioning’," LWS Working papers 16, LIS Cross-National Data Center in Luxembourg.
    5. Olaf Hübler, 2013. "Are Tall People Less Risk Averse Than Others?," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 133(1), pages 23-42.
    6. repec:cup:judgdm:v:4:y:2009:i:7:p:534-542 is not listed on IDEAS
    7. Samer Sarofim & Elizabeth Minton & Amabel Hunting & Darrell E. Bartholomew & Saman Zehra & William Montford & Frank Cabano & Pallab Paul, 2020. "Religion's influence on the financial well‐being of consumers: A conceptual framework and research agenda," Journal of Consumer Affairs, Wiley Blackwell, vol. 54(3), pages 1028-1061, September.
    8. Oscar Zapata, 2018. "Turning to God in Tough Times? Human Versus Material Losses from Climate Disasters in Canada," Economics of Disasters and Climate Change, Springer, vol. 2(3), pages 259-281, October.
    9. Renuka Sane & Susan Thomas, 2020. "From Participation To Repurchase: Low Income Households And Micro‐insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 87(3), pages 783-814, September.
    10. Feng Chen & Xiaolin Chen & Weiqiang Tan & Lin Zheng, 2020. "Religiosity and cross‐country differences in trade credit use," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 909-941, April.
    11. Tracey West & Andrew Worthington, 2014. "Macroeconomic Conditions and Australian Financial Risk Attitudes, 2001–2010," Journal of Family and Economic Issues, Springer, vol. 35(2), pages 263-277, June.
    12. Xu, Ziyao & Ma, Junfeng & Li, Donghui & Fu, Wentao, 2022. "Religious beliefs and stock market participation: Evidence from urban households in China," Research in International Business and Finance, Elsevier, vol. 63(C).
    13. Richard J. Cebula & Fabrizio Rossi, 2021. "Religiosity and corporate risk-taking: evidence from Italy," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(4), pages 751-763, October.
    14. Speed, David & Barry, Caitlin & Cragun, Ryan, 2020. "With a little help from my (Canadian) friends: Health differences between minimal and maximal religiosity/spirituality are partially mediated by social support," Social Science & Medicine, Elsevier, vol. 265(C).
    15. repec:rfb:journl:v:10:y:2018:i:2:p:0077-094 is not listed on IDEAS
    16. Anja Koebrich Leon & Christian Pfeifer, 2013. "An Empirical Note on Religiosity and Social Trust using German Survey Data," Economics Bulletin, AccessEcon, vol. 33(1), pages 753-763.
    17. 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.
    18. Hanaan Yaseen, 2018. "Dividend policy and socio-cultural factors: some preliminary findings," The Review of Finance and Banking, Academia de Studii Economice din Bucuresti, Romania / Facultatea de Finante, Asigurari, Banci si Burse de Valori / Catedra de Finante, vol. 10(2), pages 077-094, December.
    19. Haneishi, Yusuke & Maruyama, Atsushi & Takagaki, Michiko & Kikuchi, Masao, 2014. "Farmers’ risk attitudes to influence the productivity and planting decision: A case of rice and maize cultivation in rural Uganda," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 9(4), pages 1-14, December.
    20. Younis, Heba & Dimitratos, Pavlos & Elbanna, Said, 2022. "International entrepreneurial SMEs in the muslim world: The role of religion in the GCC countries," International Business Review, Elsevier, vol. 31(5).
    21. Joanna Orr & Mark Ward & Rose Anne Kenny & Christine Ann McGarrigle, 2021. "Mini-mental state examination trajectories after age 50 by religious affiliation and practice in Ireland," European Journal of Ageing, Springer, vol. 18(4), pages 565-574, December.
    22. Hamed Ekhtiari & Ali Jannati & Morteza Dehghani & Azarakhsh Mokri, 2009. "Prefer a cash slap in your face over credit for halva," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 4(7), pages 534-542, December.
    23. Wang, Jimin & Wang, Cong, 2021. "Can religions explain cross country differences in innovative activities?," Technovation, Elsevier, vol. 107(C).
    24. Yaron Zelekha & Gil Avnimelech & Eyal Sharabi, 2014. "Religious institutions and entrepreneurship," Small Business Economics, Springer, vol. 42(4), pages 747-767, April.

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    More about this item

    Keywords

    Risk Aversion; Nationality; Immigrants; Religion; Germany;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • Z12 - Other Special Topics - - Cultural Economics - - - Religion

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