Comparing risk preferences over financial and environmental lotteries

Riddel, Mary

doi:10.1007/s11166-012-9149-1

Cited by 30 publications

(27 citation statements)

References 29 publications

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“…For example the BPOP could be used in a situation in which the respondent has been asked for their willingness to take risks in two different domains [e.g., financial and environmental, Riddel (2012)]. The only difference from the analysis of this paper is that the same vector of explanatory variables would apply to both responses.…”

Section: Resultsmentioning

confidence: 99%

Assortative mating on risk attitude

2014

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Spousal correlation in risk attitude is estimated using data from the German Socio-Economic Panel over the period [2004][2005][2006][2007][2008][2009]. We apply the bivariate panel ordered probit model to the analysis of the simultaneous determination of the male's and the female's risk attitude, using the survey question about general willingness to take risk, provided on a 0-10 Likert-scale. The correlations between both the individual-specific effects of the two partners and the two within-individual errors are separately estimated, and found to be +0.285 and +0.310, respectively. We consider the former to be a key parameter, since its positive sign may be interpreted in terms of positive assortative mating on risk attitude: individuals tend to form partnerships with others having a similar risk attitude. We also find evidence that this correlation increases with years of marriage, suggesting either a form of spousal socialization or a selection process in which marriage breakdown is more likely in poorly matched couples. Keywords

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Section: Resultsmentioning

confidence: 99%

Assortative mating on risk attitude

2014

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“…In a more recent study, Dohmen et al (2011) use a large, representative survey of the German population to elicit risk preferences across a number of domains and find that the self-reported, risk-taking measures are highly, but not perfectly, correlated across domains. 5 Finally, in a study with a different flavor, Riddel (2012) compares subjects' evaluation of financial and environmental lotteries to determine whether preferences over environmental risks can be reasonably approximated by the Expected Utility framework. The author finds that subjects are more 3 Many studies find that discount rates in the health domain are larger than those in the monetary domain for health gains, but lower than those in the monetary domain for health losses (Cairns 1992;Chapman and Elstein 1995;Madden et al 1999).…”

Section: Literature Reviewmentioning

confidence: 99%

Time preferences and risk aversion: Tests on domain differences

Ioannou

Sadeh

2016

J Risk Uncertain

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Understanding how individuals discount and evaluate the risks of environmental outcomes is a prime component in designing effective environmental policy. We use an incentivized experimental design to investigate whether subjects' time preferences and risk aversion across the monetary and environmental domains differ. We find that subjects' time preferences are not significantly different across the two domains. In contrast, subjects exhibit a higher degree of risk aversion in the environmental domain. Furthermore, we corroborate earlier results, documenting that women are more risk averse than men in the monetary domain, and show this finding to also hold in the environmental domain.Keywords Risk and time · Discounting · Risk aversion · Domain differences · Environmental domainWe are grateful to Michael Vlassopoulos, Manos Mentzakis, Zacharias Maniadis and Daniel Read for their comments and suggestions. We would also like to thank

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“…Given the current unresolved issues with respect to the direct elicitation and interpretation of environmental risk preferences (Riddel 2012), we chose to elicit financial risk preferences as they have the best theoretical foundation, at least to date. From the experimental literature, there is evidence that risk preferences elicited in the financial domain may be linked with environmental decisions.…”

Section: Introductionmentioning

confidence: 99%

The impact of latent risk preferences on valuing the preservation of threatened lynx populations in Poland

Bartczak

Mariel

Chilton

et al. 2015

Aus J Agri & Res Econ

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A recent innovation in stated preference environmental valuation surveys is to acknowledge uncertainty associated with scientific predictions about ecological outcomes, complexity of management actions and potential difficulties in implementing environmental programs. Still little is known about how individuals assimilate and respond to outcome uncertainty, particularly in terms of how it affects their stated valuations. In this paper, we focus on the impact of individual risk preferences on willingness to pay for conservation of threatened species. Risk preferences are elicited through a standard incentivised multiple price list and preferences for the conservation of the two main lynx populations in Poland through a discrete choice experiment. To account for the uncertainty associated with imprecise scientific knowledge about environmental outcome, attributes in the choice experiment are presented as conservation status in terms of descriptive, non-numerical categories. The results from the multiple price list and the choice experiment are jointly analysed in a latent variable model by assuming that the responses to both are driven by the same preferences. We find that the latent risk preferences are linked to choices of the status quo option, which is the riskiest option in terms of the survival of the endangered lynx populations.

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Comparing risk preferences over financial and environmental lotteries

Cited by 30 publications

References 29 publications

Assortative mating on risk attitude

Assortative mating on risk attitude

Time preferences and risk aversion: Tests on domain differences

The impact of latent risk preferences on valuing the preservation of threatened lynx populations in Poland

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