Risk, Loss, and Ambiguity Aversion after a Natural Disaster

Shupp, Robert; Loveridge, Scott; Skidmore, Mark; Lim, Jungmin; Rogers, Cynthia

doi:10.1007/s41885-017-0013-2

Cited by 21 publications

(17 citation statements)

References 40 publications

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“…We believe that military and firefighting experience are comparable in their effects on risk preferences. Our paper is also closely related to Shupp et al (2017) who find that risk aversion increased for people who were injured in the Oklahoma 150 tornado in 2013, but it decreased for those who saw the injuries of others. None of the experienced firefighters in our sample had been seriously injured.…”

supporting

confidence: 61%

“…Email addresses: krcalo@mail.muni.cz (Ondřej Krčál), rostanek@mail.muni.cz (Rostislav Staněk), slanicay@mail.muni.cz (Martin Slanicay) Bucciol and Zarri, 2013;Kim and Lee, 2014;Cameron and Shah, 2015;Hanaoka et al, 2016;Cassar et al, 2017;Shupp et al, 2017), if they live under specific conditions for a long period of time, for example if they live in disaster areas despite not having been directly affected by any disaster (Bchir and Willinger, 2013;Cassar et al, 2017;Shupp et al, 2017), if they have lower wealth or income (Guiso and Paiella, 2008;Tanaka et al, 2010), or if they have lived through an era of low stock market returns (Malmendier and Nagel, 2011;Ampudia and Ehrmann, 2017;20 Malmendier et al, 2011). The direction of the effect is not clear.…”

Section: Introductionmentioning

confidence: 99%

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Made for the job or by the job? A lab-in-the-field experiment with firefighters

Krčál

Staněk

Slanicay

2019

Research in Economics

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A large body of evidence supports a negative association between risk aversion of workers and the level of risk they face in their occupations. This relationship could be explained by the self-selection of workers into jobs according to their risk preferences or by the effect on risk attitudes of occupations in which people face or witness dangerous situations. We use incentivized experiments to measure risk preferences among three different groups: experienced firefighters, novice firefighters, and students. We find that experienced firefighters are less riskaverse than novice firefighters, and these in turn are less risk-averse than students. The effects remain significant even after controlling for other relevant differences between these groups. Our findings suggest that the observed relationship between risk aversion and high-risk occupations is not only a result of self-selection but also of people's preferences being shaped by their work lives.Abstract A large body of evidence supports a negative association between risk aversion of workers and the level of risk they face in their occupations. This relationship could be explained by the self-selection of workers into jobs according to their risk preferences or by the effect on risk attitudes of occupations in which people face or witness dangerous situations. We use incentivized experiments to measure risk preferences among three different groups: experienced firefighters, novice firefighters, and students. We find that experienced firefighters are less risk-averse than novice firefighters, and these in turn are less risk-averse than students. The effects remain significant even after controlling for other relevant differences between these groups. Our findings suggest that the observed relationship between risk aversion and high-risk occupations is not only a result of self-selection but also of people's preferences being shaped by their work lives.

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supporting

confidence: 61%

Section: Introductionmentioning

confidence: 99%

Made for the job or by the job? A lab-in-the-field experiment with firefighters

Krčál

Staněk

Slanicay

2019

Research in Economics

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“…In order to assess risk-taking aptitudes during Covid-19 pandemic, we created a modified version of the Holt-Laury Paired Lottery Task [7] with hypothetical monetary payoff, a task wildly used to assess risk-related behaviours after catastrophic events, such as natural disasters [10]. In the original task, composed by 10 paired monetary lotteries presented on different decision rows, participants have to make a choice between Lottery A and Lottery B (Table 4).…”

Section: The Covid-19 Risk Taskmentioning

confidence: 99%

Covid-19 in mind: how job loss and health threatening events modulate risk-taking behaviours in real-life contexts

Galandra¹,

Cerami²,

Santi³

et al. 2020

Preprint

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Covid-19 pandemic is exerting a tragic impact all around the world. First-person experience of life-threatening and stressful events can modify individuals’ risk perception, and, consequently, risk-taking behaviours. Here we investigated risk-taking profiles in 130 Italian residents, and compared healthcare to non-healthcare workers, during the lockdown phase. We ad hoc developed the “Covid-19 Risk Task”, including the classic monetary Holt-Laury Paired Lottery Task (Monetary Condition, MC) and two new ecological conditions exploring Covid-19 related risk-taking aptitudes in relation to different health (Health Status Condition, HsC) and employment (Employment Status Condition, EsC) outcomes. Results showed that, in the whole sample, individuals were more risk-averse in MC than in HsC and EsC. Moreover, a payoff increase produced a shift toward more risk-averse behaviours in MC, but not in HsC and EsC, where we found an opposite trend suggesting a more risk-loving behaviour. Finally, we found that healthcare workers were significantly less risk-averse compared to non-healthcare workers in EsC, but not in MC and HsC.These findings provided evidence of the possible effects of Covid-19 outbreak on risk-taking aptitudes. The negative impact on human choices and, consequently, on the whole world economy of this catastrophic life event must not be underestimated.

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“…The literature about risk-taking attitude and behaviors in relation to life-threatening events indicates that first-person experience of extremely stressful events can change risk attitudes by either decreasing or increasing individual risk tolerance, namely making people have more risk-averse (Holt and Laury, 2002;Shupp et al, 2017;Jakiela and Ozier, 2018) or riskprone (Orri Stefánsson and Bradley, 2019;Galandra et al, 2020) attitudes. However, previous studies on this topic have often used tasks including hypothetical monetary stimuli (i.e., simulations of monetary rewards, opposed to real monetary stimuli which allow the subjects to gain or lose a real payoff) (Xu et al, 2016), preventing conclusions about real life contexts and decisions, as well as people's choices in relation to non-monetary outcomes.…”

Section: Introductionmentioning

confidence: 99%

Risk-Aversion for Negative Health Outcomes May Promote Individual Compliance to Containment Measures in Covid-19 Pandemic

et al. 2021

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First-person experience of stressful life events can change individuals' risk attitudes, driving to increased or decreased risk perception. This shift to more risk-averse or risk-loving behaviors may find a correlate in the individual psycho-socio-emotional profile. To this purpose, we aimed to estimate the relationship between differences in risk-taking attitudes toward possible negative health outcomes and psycho-socio-emotional dimensions modulating the experience of life-threatening situations, in the context of the Covid-19 pandemic. In March 2020, we launched the PsyCovid Study (https://wprn.org/item/428452) to assess psycho-socio-emotional changes due to Covid-19 pandemic in the Italian population. Additionally, we distributed to 130 participants the Covid-19 Risk Task, including monetary and health-related stimuli, estimating a measure of risk-aversion toward health and classifying participants on the basis of their risk-attitude profiles. The set of psycho-socio-emotional variables was reduced to three PCA components: Proactivity, Isolation, Inactivity. The individual degree of risk-aversion toward negative health outcomes was directly related to Proactivity, encasing empathic, social support and positive coping strategies, which may prompt individuals to put in place self-protection strategies toward possible negative health consequences. These findings indicate that a risk-averse profile toward possible negative health outcomes may be associated to higher levels of individual prosocial and proactive dispositions, possibly making individuals' more compliant with the social and hygienic guidelines and, thus, reducing their exposure to the SARS-CoV-2 infection.

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Risk, Loss, and Ambiguity Aversion after a Natural Disaster

Cited by 21 publications

References 40 publications

Made for the job or by the job? A lab-in-the-field experiment with firefighters

Made for the job or by the job? A lab-in-the-field experiment with firefighters

Covid-19 in mind: how job loss and health threatening events modulate risk-taking behaviours in real-life contexts

Risk-Aversion for Negative Health Outcomes May Promote Individual Compliance to Containment Measures in Covid-19 Pandemic

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