12. Oktober 2012
DIW Applied Micro Seminar
Risk attitudes, Development and Growth.
Evidence from Experiments in 28 Countries
Termin
12. Oktober 201213:15-14:45
Ort
Gustav-Schmoller-RaumDIW Berlin im Quartier 110Room 3.3.002AAnton-Wilhelm-Amo-Straße 5810117 BerlinSprecher*innen
Ferdinand Vieider, WZB
Abstract:
We measure risk attitudes across 28 different countries in a controlled, fully incentivized experiment. The results contribute to building bridges between different strands of literature. First and foremost, we show that risk attitudes vary considerably between countries. For typical experimental stakes, risk seeking or neutrality is just as frequent as risk aversion. Looking at a cross-section of countries at different development levels, we find a very strong and highly significant positive correlation between median risk aversion and income per capita. This gives rise to a paradox, seen that within-country risk aversion has been found to be negatively associated with income. The paradox is resolved by recurring to Unified Growth Theory. Our results are consistent with the prediction that risk attitudes act as a transmission mechanism for growth by encouraging entrepreneurship. Implications for different accounts of comparative development are discussed.
We measure risk attitudes across 28 different countries in a controlled, fully incentivized experiment. The results contribute to building bridges between different strands of literature. First and foremost, we show that risk attitudes vary considerably between countries. For typical experimental stakes, risk seeking or neutrality is just as frequent as risk aversion. Looking at a cross-section of countries at different development levels, we find a very strong and highly significant positive correlation between median risk aversion and income per capita. This gives rise to a paradox, seen that within-country risk aversion has been found to be negatively associated with income. The paradox is resolved by recurring to Unified Growth Theory. Our results are consistent with the prediction that risk attitudes act as a transmission mechanism for growth by encouraging entrepreneurship. Implications for different accounts of comparative development are discussed.
