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An Empirical Exploration of the Near-Term and Persistent Effects of Conflict on Risk Preferences

Author

Listed:
  • Marc Rockmore

    () (Clark University)

  • Christopher B. Barrett

    () (Charles H. Dyson School of Applied Economics and Management and Cornell University)

  • Jeannie Annan

    () (International Rescue Committee, New York, and Harvard T H Chan School of Public Health, Boston)

Abstract

A burgeoning empirical literature on the effects of conflict on various economic behavioral parameters exhibits mixed results, with respect to both the magnitude and the direction of the effects. By estimating the distribution of estimated effects of violence on risk preferences, rather than just the average effect, we reconcile the discordant results of the prior literature. The distribution also reveals substantial and previously overlooked variation in the effects of exposure. This raises questions about the widespread use of aggregated measures of exposure to violence in conflict literature. We use panel data from northern Uganda, the latest round collected seven years after the violence ended, to explore the heterogeneous effects of different experiences of violence – personal suffering, perpetration, witness, or indirect experience through family members’ suffering – on different measures of ambiguity and risk aversion, correcting for many of the methodological shortcomings of previous studies. We find that violence has an adverse near-term effect on mental health, but with heterogeneous effects on risk aversion depending on the nature of one’s experience of violence. We also find that the risk preference effects persist even after a recovery in mental health.

Suggested Citation

  • Marc Rockmore & Christopher B. Barrett & Jeannie Annan, 2016. "An Empirical Exploration of the Near-Term and Persistent Effects of Conflict on Risk Preferences," HiCN Working Papers 239, Households in Conflict Network.
  • Handle: RePEc:hic:wpaper:239
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    References listed on IDEAS

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    1. Hans P. Binswanger, 1980. "Attitudes Toward Risk: Experimental Measurement in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 395-407.
    2. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2003. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometrica, Econometric Society, vol. 71(4), pages 1161-1189, July.
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    4. Giacomo De Luca & Marijke Verpoorten, 2015. "Civil war, social capital and resilience in Uganda," Oxford Economic Papers, Oxford University Press, vol. 67(3), pages 661-686.
    5. Michael Callen & Mohammad Isaqzadeh & James D. Long & Charles Sprenger, 2014. "Violence and Risk Preference: Experimental Evidence from Afghanistan," American Economic Review, American Economic Association, vol. 104(1), pages 123-148, January.
    6. Therése Pettersson & Peter Wallensteen, 2015. "Armed conflicts, 1946–2014," Journal of Peace Research, Peace Research Institute Oslo, vol. 52(4), pages 536-550, July.
    7. Kim, Young-Il & Lee, Jungmin, 2014. "The long-run impact of a traumatic experience on risk aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 108(C), pages 174-186.
    8. Muhammad Nasir & Marc Rockmore & Chih Ming Tan, 2015. "It's No Spring Break in Cancun: The Effects of Exposure to Violence on Risk Preferences, Pro-Social Behavior, and Mental Health," Working Paper series 15-40, Rimini Centre for Economic Analysis.
    9. Carlo V. Fiorio, 2004. "Confidence intervals for kernel density estimation," Stata Journal, StataCorp LP, vol. 4(2), pages 168-179, June.
    10. Edward Miguel & Shanker Satyanath & Ernest Sergenti, 2004. "Economic Shocks and Civil Conflict: An Instrumental Variables Approach," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 725-753, August.
    11. Flavio Cunha & James J. Heckman, 2009. "The Economics & Psychology of Inequality and Human Development," Working Papers 200905, Geary Institute, University College Dublin.
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