Are Risk Attitudes Fixed Factors or Fleeting Feelings?

We investigate the stability of measured risk attitudes over time, using a 13-year longitudinal sample of individuals in the National Longitudinal Survey of Youth 1979. We find that an individual’s risk aversion changes systematically in response to personal economic circumstances. Risk aversion inc...

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Publicado en:Journal of Labor Research Vol. 39; no. 2; pp. 127 - 150
Autores principales: Cho, Insoo, Orazem, Peter F., Rosenblat, Tanya
Formato: Artículo
Publicado: Springer Nature Jun2018
Materias:
Acceso en línea:Ver este registro en EBSCOhost
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        atl: Are Risk Attitudes Fixed Factors or Fleeting Feelings?
      aug:
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          Cho, Insoo
          Orazem, Peter F.
          Rosenblat, Tanya
        affil:
          Graham School of Business, Department of Economics, York College of Pennsylvania, 17403, York, PA, USA
          Department of Economics, Iowa State University, 267 Heady Hall, 50011, Ames, IA, USA
          School of Information, University of Michigan, 4332 N Quad, 48109, Ann Arbor, MI, USA
      su:
        Risk aversion
        Employment
        Labor supply
        Unemployment
        Preferences (Philosophy)
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          Risk aversion
          Employment
          Labor supply
          Unemployment
          Temporary Help Services
          Preferences (Philosophy)
      keyword:
        D00
        D8
        Measurement error
        Stability
        Variance decomposition
        Within and between variance
        D00
        D8
        Measurement error
        Stability
        Variance decomposition
        Within and between variance
      ab: We investigate the stability of measured risk attitudes over time, using a 13-year longitudinal sample of individuals in the National Longitudinal Survey of Youth 1979. We find that an individual’s risk aversion changes systematically in response to personal economic circumstances. Risk aversion increases with lengthening spells of employment and time out of labor force, and decreases with lengthening unemployment spells. However, the most important result is that the majority of the variation in risk aversion is due to changes in measured individual tastes over time and not to variation across individuals. These findings that measured risk preferences are endogenous and subject to substantial measurement errors suggest caution in interpreting coefficients in models relying on contemporaneous, one-time measures of risk preferences.
      pubtype: Academic Journal
      doctype: Article
      src: R
    language: English
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