Determinants of Risk Aversion Over Time: Experimental Evidence from Rural Thailand

Menkhoff, Lukas; Sakha, Sahra

doi:10.2139/ssrn.2785467

Cited by 5 publications

(3 citation statements)

References 48 publications

(17 reference statements)

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“…Menkhoff and Sakha (2014) find that agricultural shocks (drought and flood) and economic shocks (an increase in the price of inputs or the collapse of a business) cause rural Thai respondents to become more risk averse. Finally, using a randomized controlled trial, Carvalho et al (2014) find that Nepali women who are randomly offered savings accounts are more risk-taking and more patient than those who are not.…”

Section: Previous Literaturementioning

confidence: 91%

Stability of experimental and survey measures of risk, time, and social preferences: A review and some new results

Chuang

Schechter

2015

Journal of Development Economics

290

186

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Underlying preferences are often considered to be persistent, and are important inputs into economic models. We first conduct an extensive review of the disparate literature studying the stability of preferences measured in experiments. Then, we test the stability of individuals’ choices in panel data from rural Paraguay over almost a decade. Answers to social preference survey questions are quite stable. Experimental measures of risk, time, and social preferences do not exhibit much stability. Correlations between experimental measures of risk aversion are a more precisely estimated zero, whereas correlations for time and social preferences are larger and noisier. We also find no systematic evidence that real world shocks influence play in games. We suggest that in a developing country context researchers should explore designing simpler experiments and including survey questions in addition to experiments to measure preferences.

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Section: Previous Literaturementioning

confidence: 91%

Stability of experimental and survey measures of risk, time, and social preferences: A review and some new results

Chuang

Schechter

2015

Journal of Development Economics

290

186

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“…To our knowledge, our data are unique in the sense that they document risk-taking on a high inter-temporal resolution when incomes and environmental conditions are changing. Our work relates to Menkhoff and Sakha (2016) and Chuang and Schechter (2015), the only two studies we know of that assess the stability of risk preferences over time in developing economies (see Chuang and Schechter (2015) for an extensive overview). They look at time steps of several years while we focus on monthly observations.…”

Section: Introductionmentioning

confidence: 99%

“…They look at time steps of several years while we focus on monthly observations. Moreover, we focus on the different roles of anticipated and unanticipated fluctuations in incomes and resulting risks, while Menkhoff and Sakha (2016) and Chuang and Schechter (2015) focus on the impact of shocks. Our results also add to the understanding how to elicit risk preferences in the developing world (see e.g.…”

Section: Introductionmentioning

confidence: 99%

Changing Background Risk and Risk-Taking - Evidence from the Field

Kleemann

Riekhof

2018

SSRN Journal

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Decisions involving risk are usually taken in the presence of other insurable or non-insurable risks, the latter type called background risk. We examine how changing background risk influences risk-taking based on panel data with monthly observations from Senegalese fishermen. Fishing income is volatile and income risk depends on weather conditions and on technologies employed. To measure risktaking, we use an incentivized investment task. To measure background risk, we consider long-run wind conditions and a measure based on comparing standardized monthly income deviations from the yearly individual mean. We find that the latter measure that controls for technology choices and thus takes conscious reduction of risk exposure into account has a significant impact when overall fishing income is below average. Then, higher income risk increases risk-taking, suggesting intemperate behavior in low-income situations. This effect is stronger for poorer fishermen, highlighting the need for safety nets.

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Estimating risky behavior with multiple-item risk measures

Menkhoff

Sakha

2017

Journal of Economic Psychology

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We compare seven established risk elicitation methods and investigate how robustly they explain eleven kinds of risky behavior with 760 individuals. Risk measures are positively correlated; however, their performance in explaining behavior is heterogeneous and, therefore, difficult to assess ex ante. Greater diversification across risk measures is conducive to closing this knowledge gap. What we find is that performance increases considerably if we combine single-item risk measures to form multiple-item risk measures. Results are improved the more single-item measures they contain, and also if these single-item risk measures use different elicitation methods. Interestingly, survey items perform just as well as incentivized experimental items in explaining risky behavior.

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Determinants of Risk Aversion Over Time: Experimental Evidence from Rural Thailand

Cited by 5 publications

References 48 publications

Stability of experimental and survey measures of risk, time, and social preferences: A review and some new results

Stability of experimental and survey measures of risk, time, and social preferences: A review and some new results

Changing Background Risk and Risk-Taking - Evidence from the Field

Estimating risky behavior with multiple-item risk measures

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