The editor in charge of this paper was Orazio Attanasio.
INDIVIDUAL RISK ATTITUDES: MEASUREMENT, DETERMINANTS, AND BEHAVIORAL CONSEQUENCES
Version of Record online: 31 MAR 2011
© 2011 by the European Economic Association
Journal of the European Economic Association
Volume 9, Issue 3, pages 522–550, June 2011
How to Cite
Dohmen, T., Falk, A., Huffman, D., Sunde, U., Schupp, J. and Wagner, G. G. (2011), INDIVIDUAL RISK ATTITUDES: MEASUREMENT, DETERMINANTS, AND BEHAVIORAL CONSEQUENCES. Journal of the European Economic Association, 9: 522–550. doi: 10.1111/j.1542-4774.2011.01015.x
Acknowledgments: The authors wish to thank two referees for insightful comments, as well as seminar participants at numerous seminars and conferences, in particular Lex Borghans, Catherine Eckel, Simon Gächter, Luigi Guiso, Glenn Harrison, and James J. Heckman, for helpful suggestions. We thank IZA, Bonn, the European Research Council (Starting Grant), and the Volkswagen Foundation for financial support. Dohmen, Falk, Huffman, and Sunde are research fellows at IZA. Falk is a research fellow at CEPR and Sunde is a research affiliate at CEPR.
- Issue online: 11 MAY 2011
- Version of Record online: 31 MAR 2011
This paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects' homes. Using a question asking people about their willingness to take risks “in general”, we find that gender, age, height, and parental background have an economically significant impact on willingness to take risks. The experiment confirms the behavioral validity of this measure, using paid lottery choices. Turning to other questions about risk attitudes in specific contexts, we find similar results on the determinants of risk attitudes, and also shed light on the deeper question of stability of risk attitudes across contexts. We conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks, occupational choice, and smoking. The question about risk taking in general generates the best all-round predictor of risky behavior.