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Wildfires in Poland: the impact of risk preferences and loss aversion on environmental choices

Author

Listed:
  • Anna Bartczak

    (Faculty of Economic Sciences, Warsaw Ecological Economics Center , University of Warsaw)

  • Susan Chilton

    (Newcastle University Business School)

  • Jürgen Meyerhoff

    (Technische Universität Berlin, Institute for Landscape and Environmental Planning)

Abstract

This paper examines how risk preferences and loss aversion affect choices over a risky environmental good, wildfire prevention in Poland. We collect data in a stated preference survey that allows us to calculate both risk aversion and loss aversion parameters from individual respondents in both the financial and environmental domains. In doing so, we are able to confirm that this behaviour is consistent with prospect theory and holds for the majority of respondents. Additionally, we find little evidence of domain specificity of risk: responses to the financial risk questions were good predictors of responses to the environmental risk questions.

Suggested Citation

  • Anna Bartczak & Susan Chilton & Jürgen Meyerhoff, 2014. "Wildfires in Poland: the impact of risk preferences and loss aversion on environmental choices," Working Papers 2014-08, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2014-08
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    File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP125.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Zack Dorner & Daniel A. Brent & Anke Leroux, 2019. "Preferences for Intrinsically Risky Attributes," Land Economics, University of Wisconsin Press, vol. 95(4), pages 494-514.
    3. Alló, M. & Loureiro, M.L., 2020. "Assessing preferences for wildfire prevention policies in Spain," Forest Policy and Economics, Elsevier, vol. 115(C).
    4. Dorner, Zach & Brent, Daniel A. & Leroux, Anke, 2016. "Eliciting Risk Preferences for Intrinsic Attributes," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236644, Agricultural and Applied Economics Association.
    5. Rui He & Jianjun Jin & Foyuan Kuang & Chenyang Zhang & Tong Guan, 2019. "Farmers’ Risk Cognition, Risk Preferences and Climate Change Adaptive Behavior: A Structural Equation Modeling Approach," IJERPH, MDPI, vol. 17(1), pages 1-13, December.
    6. Töppel, Jannick & Tränkler, Timm, 2019. "Modeling energy efficiency insurances and energy performance contracts for a quantitative comparison of risk mitigation potential," Energy Economics, Elsevier, vol. 80(C), pages 842-859.
    7. Champ, Patricia A. & Meldrum, James R. & Brenkert-Smith, Hannah & Warziniack, Travis W. & Barth, Christopher M. & Falk, Lilia C. & Gomez, Jamie B., 2020. "Do actions speak louder than words? Comparing the effect of risk aversion on objective and self-reported mitigation measures," Journal of Economic Behavior & Organization, Elsevier, vol. 169(C), pages 301-313.
    8. James R. Meldrum & Hannah Brenkert-Smith & Patricia A. Champ & Jamie Gomez & Hilary Byerly & Lilia Falk & Christopher M. Barth, 2021. "Would you like to know more? The effect of personalized wildfire risk information and social comparisons on information-seeking behavior in the wildland–urban interface," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 106(3), pages 2139-2161, April.
    9. Daniel Osberghaus, 2017. "Prospect theory, mitigation and adaptation to climate change," Journal of Risk Research, Taylor & Francis Journals, vol. 20(7), pages 909-930, July.
    10. 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.
    11. Schlüter, Maja & Baeza, Andres & Dressler, Gunnar & Frank, Karin & Groeneveld, Jürgen & Jager, Wander & Janssen, Marco A. & McAllister, Ryan R.J. & Müller, Birgit & Orach, Kirill & Schwarz, Nina & Wij, 2017. "A framework for mapping and comparing behavioural theories in models of social-ecological systems," Ecological Economics, Elsevier, vol. 131(C), pages 21-35.

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    More about this item

    Keywords

    risk preferences over financial and environmental domains; forest fires; loss aversion; probability weighting; prospect theory;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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