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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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    File URL: http://econstor.eu/bitstream/10419/55035/1/684377071.pdf
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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
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    Handle: RePEc:zbw:aluord:114
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    Web page: http://www.walter-eucken-institut.de/
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    1. Hryshko, Dmytro & Luengo-Prado, Maria Jose & Sørensen, Bent E, 2010. "Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education," CEPR Discussion Papers 7999, C.E.P.R. Discussion Papers.
    2. 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).
    3. Guido Heineck & Bernd Süssmuth, 2010. "A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the two Germanies," CESifo Working Paper Series 3199, CESifo Group Munich.
    4. Luc Arrondel, 2009. ""My Father was right": The transmission of values between generations," PSE Working Papers halshs-00566808, HAL.
    5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, May.
    6. Catherine C. Eckel & Philip J. Grossman, 2008. "Sex and Risk: Experimental Evidence," Monash Economics Working Papers archive-09, Monash University, Department of Economics.
    7. 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).
    8. Guiso, Luigi & Paiella, Monica, 2004. "The Role of Risk Aversion in Predicting Individual Behaviours," CEPR Discussion Papers 4591, C.E.P.R. Discussion Papers.
    9. 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.
    10. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
    11. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 537-79, May.
    12. 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.
    13. 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.
    14. Maria De Paola, 2010. "The Determinants Of Risk Aversion: The Role Of Intergenerational Transmission," Working Papers 201016, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
    15. 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.
    16. 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.
    17. 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.
    18. Mwabu, Germano & Schultz, T Paul, 1996. "Education Returns across Quantiles of the Wage Function: Alternative Explanations for Returns to Education by Race in South Africa," American Economic Review, American Economic Association, vol. 86(2), pages 335-39, May.
    19. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
    20. repec:fiu:wpaper:0801 is not listed on IDEAS
    21. Pfeifer, Christian, 2008. "Risk Aversion and Sorting into Public Sector Employment," IZA Discussion Papers 3503, Institute for the Study of Labor (IZA).
    22. 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.
    23. 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.
    24. 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.
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