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Are Tall People Less Risk Averse than Others?

  • Olaf Hübler

This paper examines the question of whether risk aversion of prime-age workers is negatively correlated with human height to a statistically significant degree. A variety of estimation methods, tests and specifications yield robust results that permit one to answer this question in the affirmative. Hausman-Taylor panel estimates, however, reveal that height effects disappear if personality traits and skills, parents' behaviour, and interactions between environment and individual abilities appear simultaneously. Height is a good proxy for these influences if they are not observable. Not only one factor but a combination of several traits and interaction effects can describe the time-invariant individual effect in a panel model of risk attitude.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.405739.de/diw_sp0457.pdf
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 457.

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Length: 28 p.
Date of creation: 2012
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp457
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