How Vulnerable Is Risk Aversion to Wealth, Health and Other Risks? An Empirical Analysis for Europe

Courbage, Christophe; Montoliu-Montes, Guillem; Rey, Béatrice

doi:10.2139/ssrn.3291229

Cited by 12 publications

(9 citation statements)

References 40 publications

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“…Instead, they may prefer solutions that they feel familiar with such as solutions which rely on nostalgic frames, even if these solutions are radical in practice. Related literature on risk aversion shows that individuals who are exposed to both economic and noneconomic risks are unwilling to make risky decisions (Courbage et al, 2018;Guiso and Paiella, 2008). Furthermore, Fernandez and Rodrik (1991) demonstrated that individuals favour the status quo over reforms when the distributive outcomes from these reforms are uncertain, even if these individuals are risk-neutral, forward-looking, and rational.…”

Section: Experience Of Status Decline and Expectation Of Status Declinementioning

confidence: 99%

With status decline in sight, voters turn radical right: how do experience and expectation of status decline shape electoral behaviour?

Wass

Kantola

et al. 2022

Eur. Pol. Sci. Rev.

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We distinguish between the experience and expectation of subjective status decline in relation to electoral behaviour. Studies often link support for radical parties, especially radical right ones, to voters’ experience of status decline. A few other studies argue that voters’ expectation of status decline also triggers radical right support. Without precise measures of both perceptions, it has been difficult to distinguish which (or both) is most relevant for radical right support in Western Europe and the USA. Using survey data from 2018 (n = 4,076) and 2020 (n = 2,106) in Finland, we could precisely measure and distinguish between voters’ experience and expectation of status decline. Descriptively, voters who have experienced status decline have low income, whereas voters who expect status decline have (lower)middle income. Using multivariate analyses, we find that voters who expect status decline consistently prefer radical right parties more than voters who expect status improvement. However, there is no robust evidence of radical right support among voters who have experienced status decline. These findings suggest that the expectation, not experience, of status decline drives radical right support. If these expectations trigger radical right support in Nordic welfare states, they may be even more pertinent in less comprehensive welfare states.

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Section: Experience Of Status Decline and Expectation Of Status Declinementioning

confidence: 99%

With status decline in sight, voters turn radical right: how do experience and expectation of status decline shape electoral behaviour?

Wass

Kantola

et al. 2022

Eur. Pol. Sci. Rev.

View full text Add to dashboard Cite

show abstract

“…Decker and Schmitz (2016) find that a physical health shock (measured by a loss of grip strength) decreases one's willingness to take risks (WTR). Schurer (2015) finds a positive association between self-rated health and the WTR, which was confirmed more recently by Courbage et al (2017).…”

Section: Motivationmentioning

confidence: 59%

Mental Health Changes and the Willingness to Take Risks

Richter

Steinorth

2019

SSRN Journal

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“…Step 6 We prove assertions (i)-(ii). We consider the PDEs (5.8) and (5.10) where we replace π * 0 with π 0 ∈ B.…”

Section: By Proposition 52 and Point 3 From Definition 41 We Note mentioning

confidence: 91%

“…However, many empirical studies suggest that agents' risk attitudes are correlated with their wealth, see e.g. Shaw [21], Wik et al [22], Anderson and Galinsky [1], Bucciol and Miniaci [5], Courbage et al [6]. Consequently, we should use wealthdependent risk aversion coefficients to model, and understand, economic decisions of investors and insurance companies in risky environment.…”

Section: Introductionmentioning

confidence: 99%

Asymptotic Optimality of a First-Order Approximate Strategy for an Exponential Utility Maximization Problem with a Small Coefficient of Wealth-Dependent Risk Aversion

Delong

2020

Appl Math Optim

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In Delong [8] we investigate an exponential utility maximization problem for an insurer who faces a stream of non-hedgeable claims. We assume that the insurer's risk aversion coefficient consists of a constant risk aversion and a small amount of wealth-dependent risk aversion. We apply perturbation theory and expand the equilibrium value function of the optimization problem on the parameter controlling the degree of the insurer's risk aversion depending on wealth. We derive a candidate for the first-order approximation to the equilibrium investment strategy. In this paper we formally show that the zeroth-order investment strategy π * 0 postulated by Delong (Math Methods Oper Res 89:73-113, 2019) performs better than any strategy π 0 when we compare the asymptotic expansions of the objective functions up to order O(1) as → 0, and the first-order investment strategy π * 0 + π * 1 postulated by Delong (Math Methods Oper Res 89:73-113, 2019) is the equilibrium strategy in the class of strategies π * 0 + π 1 when we compare the asymptotic expansions of the objective functions up to order O(2) as → 0, where denotes the parameter controlling the degree of the insurer's risk aversion depending on wealth.

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How Vulnerable Is Risk Aversion to Wealth, Health and Other Risks? An Empirical Analysis for Europe

Cited by 12 publications

References 40 publications

With status decline in sight, voters turn radical right: how do experience and expectation of status decline shape electoral behaviour?

With status decline in sight, voters turn radical right: how do experience and expectation of status decline shape electoral behaviour?

Mental Health Changes and the Willingness to Take Risks

Asymptotic Optimality of a First-Order Approximate Strategy for an Exponential Utility Maximization Problem with a Small Coefficient of Wealth-Dependent Risk Aversion

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