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Can Education Change Risk Preference? Evidence from Indonesia and Mexico

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  • Zhou, Renee

    (University of Warwick)

Abstract

To test whether education can change risk preference, I exploit the Indonesian school construction programme and the Mexican education reform in compulsory schooling as two separate natural experiments. Applying the instrumental variable approach, I do not find a causal effect of education on risk preference. The results are consistent in the two different settings, so my findings are externally valid. The results suggest that a change in risk preference may not be the channel via which the impact of education on risk-taking in real life. This paper contributes to the literature on the determinants of social preferences and the outcomes of education.

Suggested Citation

  • Zhou, Renee, 2023. "Can Education Change Risk Preference? Evidence from Indonesia and Mexico," Warwick-Monash Economics Student Papers 45, Warwick Monash Economics Student Papers.
    • Handle: RePEc:wrk:wrkesp:45
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/wmesp/manage/45_-_ziren_zhou.pdf
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    References listed on IDEAS

    as
    1. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
    2. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde & Jürgen Schupp & Gert G. Wagner, 2011. "Individual Risk Attitudes: Measurement, Determinants, And Behavioral Consequences," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 522-550, June.
    3. Richard Akresh & Daniel Halim & Marieke Kleemans, 2023. "Long-Term and Intergenerational Effects of Education: Evidence from School Construction in Indonesia," The Economic Journal, Royal Economic Society, vol. 133(650), pages 582-612.
    4. Matthias Sutter & Michael Weyland & Anna Untertrifaller & Manuel Froitzheim, 2020. "Financial literacy, risk and time preferences - Results from a randomized educational intervention," Working Papers 2020-27, Faculty of Economics and Statistics, Universität Innsbruck.
    5. Shawn Cole & Anna Paulson & Gauri Kartini Shastry, 2016. "High School Curriculum and Financial Outcomes: The Impact of Mandated Personal Finance and Mathematics Courses," Journal of Human Resources, University of Wisconsin Press, vol. 51(3), pages 656-698.
    6. Shawn Cole & Anna Paulson & Gauri Kartini Shastry, 2014. "Smart Money? The Effect of Education on Financial Outcomes," The Review of Financial Studies, Society for Financial Studies, vol. 27(7), pages 2022-2051.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Risk preference ; risk aversion ; education JEL classifications: I25 ; D90;
    All these keywords.

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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