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Intergenerational transmission of risk attitudes: A revealed preference approach

  • Leuermann, Andrea
  • Necker, Sarah
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    This study investigates whether the willingness to take income risks revealed by occupational choice is transmitted from parents to their children. Using data from the German Socio-Economic Panel (SOEP), we find that fathers' riskiness of job is a significant determinant of children's occupational risk, in particular sons' (excluding parent-child pairs with identical occupations). This is the first piece of evidence for intergenerational transmission of risk attitudes relying on real world behavior. It shows that not only individuals' own assessments of their risk attitudes correlate across generations (found by previous studies) but also risk preferences shown in exactly the same situation.

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    Paper provided by Walter Eucken Institut e.V. in its series Freiburg Discussion Papers on Constitutional Economics with number 11/4.

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    Date of creation: 2011
    Date of revision:
    Handle: RePEc:zbw:aluord:114
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    1. Hryshko, Dmytro & Luengo-Prado, Maria Jose & Sorensen, Bent, 2011. "Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education," Working Papers 2011-2, University of Alberta, Department of Economics.
    2. Maria Paola, 2013. "The Determinants of Risk Aversion: The Role of Intergenerational Transmission," German Economic Review, Verein für Socialpolitik, vol. 14(2), pages 214-234, 05.
    3. Miles S. Kimball & Claudia R. Sahm & Matthew D. Shapiro, 2009. "Risk Preferences in the PSID: Individual Imputations and Family Covariation," American Economic Review, American Economic Association, vol. 99(2), pages 363-68, May.
    4. Luc Arrondel, 2009. ""My Father was right": The transmission of values between generations," PSE Working Papers halshs-00566808, HAL.
    5. Allan G. King, 1974. "Occupational choice, risk aversion, and wealth," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 27(4), pages 586-596, July.
    6. Christian Pfeifer, 2011. "Risk Aversion and Sorting into Public Sector Employment," German Economic Review, Verein für Socialpolitik, vol. 12(1), pages 85-99, 02.
    7. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
    8. Schultz, T.P. & Mwabu, G., 1995. "Education Returns Across Quantiles of the Wage Function: Alternative Explanation for Returns to Education by Race in South Africa," Papers 744, Yale - Economic Growth Center.
    9. Eckel, Catherine C. & Grossman, Philip J., 2008. "Men, Women and Risk Aversion: Experimental Evidence," Handbook of Experimental Economics Results, Elsevier.
    10. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, December.
    11. Joop Hartog & Erik Plug & Luis Diaz Serrano & Jose Vieira, 2003. "Risk compensation in wages – a replication," Empirical Economics, Springer, vol. 28(3), pages 639-647, July.
    12. Guido Heineck & Bernd Süssmuth, 2010. "A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies," SOEPpapers on Multidisciplinary Panel Data Research 345, DIW Berlin, The German Socio-Economic Panel (SOEP).
    13. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
    14. Sendhil Mullainathan & Marianne Bertrand, 2001. "Do People Mean What They Say? Implications for Subjective Survey Data," American Economic Review, American Economic Association, vol. 91(2), pages 67-72, May.
    15. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe & Schupp Jürgen & Wagner Gert, 2009. "Individual Risk Attitudes: Measurement, Determinants and Behavioral Consequences," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    16. William R. Johnson, 1977. "Uncertainty and the Distribution of Earnings," NBER Chapters, in: The Distribution of Economic Well-Being, pages 379-396 National Bureau of Economic Research, Inc.
    17. Fitzenberger, Bernd & Kunze, Astrid, 2005. "Vocational Training and Gender: Wages and Occupational Mobility among Young Workers," IZA Discussion Papers 1766, Institute for the Study of Labor (IZA).
    18. Ekelund, Jesper & Johansson, Edvard & Jarvelin, Marjo-Riitta & Lichtermann, Dirk, 2005. "Self-employment and risk aversion--evidence from psychological test data," Labour Economics, Elsevier, vol. 12(5), pages 649-659, October.
    19. Lisa R. Anderson & Jennifer M. Mellor, 2008. "Are Risk Preferences Stable? Comparing an Experimental Measure with a Validated Survey-Based Measure," Working Papers 74, Department of Economics, College of William and Mary.
    20. Luigi Guiso & Monica Paiella, 2005. "The Role Of Risk Aversion In Predicting Individual Behavior," Temi di discussione (Economic working papers) 546, Bank of Italy, Economic Research and International Relations Area.
    21. repec:tpr:qjecon:v:112:y:1997:i:2:p:537-79 is not listed on IDEAS
    22. Thomas DeLeire & Helen Levy, 2004. "Worker Sorting and the Risk of Death on the Job," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 925-954, October.
    23. Hartog, Joop & Ferrer-i-Carbonell, Ada & Jonker, Nicole, 2002. "Linking Measured Risk Aversion to Individual Characteristics," Kyklos, Wiley Blackwell, vol. 55(1), pages 3-26.
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