Overtime risk preference and its determinants: Evidence from Indonesia

Abstract

<p>This research aims at examining the potential determinants of overtime risk preference in Indonesia–one of the most diverse countries in the world. We used household and individual data as well, taken from the fourth and fifth wave of the Indonesia Family Life Survey (IFLS). The risk aversion of the individual was observed and elicited using hypothetical gambling questions. From the result of Ordinary Least Square (OLS) estimation, we find preliminary evidence that there is a decrease in risk-aversion among individuals over time. However, there is little evidence that catastrophe will alter risk choice as a proxy for a significant life event. Furthermore, our empirical finding also revealed that risk tolerance is motivated not only by demographic factors but also by the education level and individual’s time preference.</p><p> </p><p> </p><div id="gtx-anchor" style="position: absolute; visibility: hidden; left: 278px; top: 80px; width: 27px; height: 12px;"> </div><div class="jfk-bubble gtx-bubble" style="visibility: visible; left: -131px; top: 102px; opacity: 1;"> </div><div id="gtx-anchor" style="position: absolute; visibility: hidden; left: 278px; top: 80px; width: 27px; height: 12px;"> </div><div class="jfk-bubble gtx-bubble" style="visibility: visible; left: -131px; top: 102px; opacity: 1;"> </div>

The Risk Preferences Of Graduates Of Islamic Educational Institutions In Indonesia

“…Since there is no significant difference in risk preference between general and Islamic education graduates, the working effect on the relationship between pedidikan and risk preference is the same as education in general. In general, education has an effect on risk preferences (Jung, 2015;Outreville, 2015;Purnama & Nugroho, 2020) although some stated no effect (Muzakky, 2021).…”

“…Risk preference in the context of financial and investment theory can be equivalent to loss-aversion which is also influenced by religiosity (Blau & Crane, 2021;Gharbi et al, 2021;Guo et al, 2018). A person's risk preference is also influenced by the level of education (Brown et al, 2006;Jung, 2015;Outreville, 2015;Purnama & Nugroho, 2020). These studies show that a person's level of education can have both positive and negative effects on risk-aversion.…”

“…A person's level of religiosity can also affect a person's risk preferences (Miller & Hoffmann, 1995). In addition, the level of education can also affect a person's attitude in taking risks (Purnama & Nugroho, 2020).…”