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Income and choice under risk

Author

Listed:
  • Arnt O. Hopland

    (Department of Economics, Norwegian University of Science and Technology)

  • Egil Matsen

    (Department of Economics, Norwegian University of Science and Technology)

  • Bjarne Strøm

    (Department of Economics, Norwegian University of Science and Technology)

Abstract

This paper studies the relationship between income and risky choice in a field ex- periment where stakes are of first-orderimportance to the subjects' living standards. We combine observations of stopping decisions in a Norwegian game show with reliable data on each subject's income. Participants in the experiment are randomly drawn from a large subject pool that is representative of the Norwegian population. Our re- sults clearly indicate that people are risk-averse in making large-stake choices and that decision makers with high income are more willing to accept nancial risk.

Suggested Citation

  • Arnt O. Hopland & Egil Matsen & Bjarne Strøm, 2013. "Income and choice under risk," Working Paper Series 14313, Department of Economics, Norwegian University of Science and Technology.
    • Handle: RePEc:nst:samfok:14313
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    References listed on IDEAS

    as
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    9. Pierre‐André Chiappori & Monica Paiella, 2011. "Relative Risk Aversion Is Constant: Evidence From Panel Data," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1021-1052, December.
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    Cited by:

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    2. Ferdinand M. Vieider & Peter Martinsson & Pham Khanh Nam & Nghi Truong, 2019. "Risk preferences and development revisited," Theory and Decision, Springer, vol. 86(1), pages 1-21, February.
    3. Ranoua Bouchouicha & Ferdinand M. Vieider, 2019. "Growth, entrepreneurship, and risk-tolerance: a risk-income paradox," Journal of Economic Growth, Springer, vol. 24(3), pages 257-282, September.
    4. Raymond Boadi Frempong & David Stadelmann, 2021. "Risk preference and child labor: Econometric evidence," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 878-894, May.
    5. Kumar, Satish & Rao, Sandeep & Goyal, Kirti & Goyal, Nisha, 2022. "Journal of Behavioral and Experimental Finance: A bibliometric overview," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
    6. Pham, Huong Dien, 2017. "Do cultural factors alter the relationship between risk attitudes and economic welfare?," TVSEP Working Papers wp-003, Leibniz Universitaet Hannover, Institute for Environmental Economics and World Trade, Project TVSEP.
    7. Marie Lautrup & Lasse Læbo Matthiesen & Jette Bredahl Jacobsen & Toke Emil Panduro, 2023. "Welfare Effects and the Immaterial Costs of Coastal Flooding," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(2), pages 415-441, June.
    8. 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.
    9. Wright, Joshua, 2017. "To what extent does income predict an individual’s risk profile in the UK (2012- 2014)," MPRA Paper 80757, University Library of Munich, Germany.
    10. Fang, Guanfu & Li, Wei & Zhu, Ying, 2022. "The shadow of the epidemic: Long-term impacts of meningitis exposure on risk preference and behaviors," World Development, Elsevier, vol. 157(C).
    11. Vieider, Ferdinand M. & Truong, Nghi & Martinsson, Peter & Pham Khanh Nam & Martinsson, Peter, 2013. "Risk preferences and development revisited: A field experiment in Vietnam," Discussion Papers, WZB Junior Research Group Risk and Development SP II 2013-403, WZB Berlin Social Science Center.

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    Keywords

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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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