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Shaking Things Up: On the Stability of Risk and Time preferences

Author

Listed:
  • Michel Beine

    (Department of Economics and Management, Université du Luxembourg)

  • Gary Charness

    (Department of Economics, University of California, Santa Barbara, USA)

  • Anaud Dupuy

    (Department of Economics and Management, Université du Luxembourg)

  • Majlinda Joxhe

    (Department of Economics and Management, Université du Luxembourg)

Abstract

(To consult this DP, please send an e-mail to dem@uni.lu) We conduct a survey and incentivized lab-in-the-field experimental tasks in Tirana, Albania. While the original purpose of our study was to examine whether and how deep parameters such as time and risk preferences affect the intention to migrate, our study was transformed into a natural experiment owing to two large earthquakes that shook the Tirana area during our data-collection period. These events provide us with a rare opportunity to gather evidence (including a pre-earthquake control) on the effect of natural disasters on time and risk preferences. We find unambiguous effects towards more risk aversion and impatience for affected individuals. Moreover, as it turns out, the second earthquake amplified the effect of the first one, suggesting that experiences cumulate in their influence on these preferences.

Suggested Citation

  • Michel Beine & Gary Charness & Anaud Dupuy & Majlinda Joxhe, 2020. "Shaking Things Up: On the Stability of Risk and Time preferences," DEM Discussion Paper Series 20-09, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:20-09
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    JEL classification:

    • B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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