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On the sources of risk preferences in rural Vietnam

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  • Dang, Duc Anh

Abstract

In this paper, I provide a new empirical evidence that natural environment can shape individual risk preferences. By combining historical data on climate variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, individuals highly affected by climate volatility show a long term risk aversion. The finding also supports the hypothesis that when people used to live in risky environment, an incremental increase in risk affects their risk preferences less.

Suggested Citation

  • Dang, Duc Anh, 2012. "On the sources of risk preferences in rural Vietnam," MPRA Paper 38738, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38738
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    References listed on IDEAS

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    Cited by:

    1. Trung X. Hoang & Nga V. T. Le, 2021. "Natural disasters and risk aversion: Evidence from Vietnam," Natural Resources Forum, Blackwell Publishing, vol. 45(3), pages 211-229, August.
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    3. Hallegatte,Stephane & Bangalore,Mook & Jouanjean,Marie Agnes, 2016. "Higher losses and slower development in the absence of disaster risk management investments," Policy Research Working Paper Series 7632, The World Bank.
    4. Sanjaya, Muhammad Ryan, 2013. "On the source of risk aversion in Indonesia using micro data 2007," Economics Discussion Papers 2013-33, Kiel Institute for the World Economy (IfW Kiel).
    5. Cantelmo, Alessandro & Melina, Giovanni & Papageorgiou, Chris, 2023. "Macroeconomic outcomes in disaster-prone countries," Journal of Development Economics, Elsevier, vol. 161(C).

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    More about this item

    Keywords

    Climate variation; risk aversion; Vietnam;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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