Dang, Duc Anh (2012): On the sources of risk preferences in rural Vietnam.
Download (592Kb) | Preview
In this paper, I provide a new empirical evidence that natural environment can shape individual risk preferences. By combining historical data on climate variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disaster. In particular, individuals highly affected by climate volatility show a long term risk aversion.
|Item Type:||MPRA Paper|
|Original Title:||On the sources of risk preferences in rural Vietnam|
|English Title:||On the Sources of Risk Preferences in Rural Vietnam|
|Keywords:||Climate variation, risk aversion, Vietnam|
|Subjects:||D - Microeconomics > D0 - General > D03 - Behavioral Economics; Underlying Principles
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate; Natural Disasters; Global Warming
|Depositing User:||Anh D Dang|
|Date Deposited:||13. Apr 2012 12:31|
|Last Modified:||02. Mar 2013 09:48|
Abdellaoui, M., (2000). “Parameter-free elicitation of utilities and probability weighting Functions”, Management Science, 46(11): 1497-1512.
ADB, (1994). “Climate Change in Asia: Vietnam - Regional Study on Global Environmental Issues”, Manila: Asian Development Bank.
Arrow, K. J. (1965). Aspects of the Theory of Risk Bearing, Helsinki.
Baez, J., Alejandro, F., and Indhira, S., (2010). “Do Natural Disasters Affect Human Capital? An Assessment Based on Existing Empirical Evidence", IZA Discussion Paper No. 5164.
Benson, C., (1997). “The Economic Impact of Natural Disasters in Vietnam”, Working paper, Overseas Development Institute.
Binswanger, H., (1980). “Attitudes toward Risk: Experimental Measurement in Rural India", American Journal of Agricultural Economics, 62: 395-407.
Booij, A. S., van de Kuilen, G., (2009). “A parameter-free analysis of the utility of money for the general population under prospect theory”, Journal of Economic Psychology, 30(4): 651- 666.
Byrnes, J. P., Miller, D. C., and Schafer, W. D, (1999). “Gender Differences in Risk Taking: A Meta-Analysis”, Psychological Bulletin, 125(3): 367-383.
Cameron, L. and Shah, M. (2010). “Do Natural Disasters Shape Risk Attitudes?”, Working Paper
Cassar, A., Healy, A., and Kessler, C., (2011). “Trust, Risk, and Time Preferences After a Natural Disaster: Experimental Evidence from Thailand”, Working paper.
Cohen, A. and Einav, L., (2007). “Estimating Risk Preferences from Deductible Choice”, American Economic Review, 97(3): 745-788.
Cramer, J. S., Hartog, J., Jonker, N., & Van Pragg, C. M. (2002). “Low risk aversion encourages the choice for entrepreneurship: An empirical test of altruism”, Journal of Economic Behavior and Organization, 48: 29–36.
Dohmen, T., A. Falk, D. Huffman, U. Sunde, J. Schupp and G. G. Wagner (2005). “Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey”, Working Paper.
Dolan, P. and Kahneman,D., (2008). "Interpretations of Utility and Their Implications for The Valuation Of Health", Economic Journal, 118(525): 215-234.
Donkers, B., Melenberg, B., and Van Soest, A. (2001). “Estimating Risk Attitudes Using Lotteries: A Large Sample Approach”, Journal of Risk and Uncertainty, 22(2): 165-195.
Durante, R. (2009). “Risk, cooperation and the economic origins of social trust: an empirical Investigation”, Job Market Paper, Brown University.
Eckel, C., and Grossman, P., (2002). “Differences in the Economic Decisions of Men and Women: Experimental Evidence”, Elsevier Science, North-Holland, Amsterdam, The Netherlands.
ESCAP, (1990). “Urban Flood Loss Prevention and Mitigation”, Water Resources Series No. 68. Bangkok: UN Economic and Social Commission for Asia and the Pacific.
Finlay, J., (2009). “Fertility Response to Natural Disasters: The Case of Three High Mortality Earthquakes”, World Bank Policy Research Working Paper 4883.
Frankenberg, E., Jed, F., Thomas, G., Nicholas, I., Robert, P., Umar R., Bondan, S., Alan, S., Cecep, S., Wayan, S., and Duncan, T., (2008). “Mental Health in Sumatra after the Tsunami," American Journal of Public Health, 98 (9).
Gächter, S, Johnson, E., and Herrmann, A., (2010). “Individual-Level Loss Aversion in Riskless and Risky Choices”, Discussion paper, Centre for Decision Research and Experimental Economics.
Halliday, T., (2006). “Migration, Risk, and Liquidity Constraints in El Salvador," Economic Development and Cultural Change, 54 (4): 893-925.
Hartog, J., Ferrer-i-Carbonell, A., and Jonker, N., (2002). “Linking Measured Risk Aversion to Individual Characteristics”, Kyklos, 55(1): 3-26
Kahneman, D., and Tversky, A., (1979). “Prospect Theory: An Analysis of Decision Under Risk", Econometrica, 47: 263-291.
King, A. G. (1974). “Occupational choice, risk aversion, and wealth”, Industrial and Labor Relations Review, 27(4): 586–596.
Köbberling, V., and Wakker, P., (2005). “An index of loss aversion”, Journal of Economic Theory, 122(1): 119-131.
Levhari, D. and Weiss, Y. (1974). “The Effect of Risk on the Investment in Human Capital,” American Economic Review, 64(6): 950-963
Li, J., Li, S., Wang, W., Rao, L., and Liu, H. (2009). ‘Are People Always More Risk Averse After a Major Snow-hit and a Major Earthquake in China in 2008,’ Applied Cognitive Psychology .
Malmendier, U. and Nagel, S. (2011). “Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?”, Quarterly Journal of Economics, 126(1): 373-416.
Miyata, S. (2003). “Household's Risk Attitudes in Indonesian Villages”, Applied Economics 35(5): 573-583.
Nguyen, Q., (2011). “Does nurture matter: Theory and experimental investigation on the effect of working environment on risk and time preferences”, Journal of Risk and Uncertainty, 43: 245-270.
Noy, I., (2009). “The Macroeconomic Consequences of Disasters," Journal of Development Economics, 88(2): 221-231.
Paxson, C., and Cecilia, E., (2008). “Returning to New Orleans after Hurricane Katrina," American Economic Review: Papers and Proceedings, 98 (2): 38-42.
Pho, N.V. and Tuan, V.V., (1994). “Evaluation, Management and Protection of Climate and Water Resources in Vietnam”, International Hydrological Programme and United Nations Environment Programme, Hanoi.
Portner, C., (2006). “Gone with the Wind? Hurricane Risk, Fertility and Education", Working Paper.
Pratt, J. W. (1964). “Risk aversion in the small and in the large”, Econometrica, 32:122–36.
Rabin, M., (2000). “Risk aversion and expected-utility theory: A calibration theorem”, Econometrica, 68(5): 1281-1293.
Rabin, M., and Thaler, R., (2001). “Anomalies - risk aversion”, Journal of Economic Perspectives,15(1): 219-232.
Rosenzweig, M. R. and Binswanger, H. P., (1993). “Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments”, Economic Journal, 103(416): 56-78.
Shaw, K., (1996). “An Empirical Analysis of Risk Aversion and Income Growth,” Journal of Labor Economics, 14(4): 626-653.
Schmidt, U., and Zank, H., (2005). “What is loss aversion?”, Journal of Risk and Uncertainty, 30(2): 157-167.
Thomas, T., Christiaensen, L., Do, T., Le, T., (2010). “Natural Disaster and Household Welfare”, Policy Research Working Paper 5491, Worldbank.
Tversky, A., and Kahneman, D., (1992). “Advances in prospect-theory - cumulative representation of uncertainty”, Journal of Risk and Uncertainty, 5(4) 297-323.
Yamauchi, F., Yisehac, Y., and Agnes R., (2009). “Natural Disasters, Self-Insurance and Human Capital Investment : Evidence from Bangladesh, Ethiopia and Malawi", World Bank Policy Research Working Paper 4910.
Yang, D., 2008. “Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002", The B.E. Journal of Economic Analysis & Policy, 8 (1).
van den Berg, M., Fort, R., and Burger, K., 2009. “Natural Hazards And Risk Aversion: Experimental Evidence from Latin America”, Paper prepared for presentation at the International Association of Agricultural Economists Conference, Beijing, China, August 16-22, 2009.
Viet Nam MWR and UNDP (1992) Proceedings of the International Workshop on Flood Mitigation, Emergency Preparedness and Flood Disaster Management. 22-25 June, Hanoi. Hanoi: Viet Nam Ministry of Water Resources and United Nations Development Programme.
Viscusi, W. K., & Hersch, J. (2001). “Cigarette smokers as job risk takers”, Review of Economics and Statistics, 83(2): 269–280.
VNCIDNDR, (1994). “Nation Report of the Socialist Republic of Vietnam Prepared for the IDNDR Mid-Term Review and die 1994 World Conference on Natural Disaster Reduction”, National Committee for the IDNDR of Viet Nam and Viet Nam Central Committee for Flood and Storm Control, Hanoi.
World Bank, 2010. “Whether the Storm: Options for Disaster Risk Financing in Vietnam”, The World Bank.
World Bank (2005). “Natural Disaster Hotspots: A Global Risk Analysis”, Disaster Risk Management Series No. 5, Hazard Management Unit, The World Bank.