Shocks, Individual Risk Attitude, and Vulnerability to Poverty among Rural Households in Thailand and Vietnam

Gloede, Oliver; Menkhoff, Lukas; Waibel, Hermann

doi:10.1016/j.worlddev.2013.11.005

Cited by 100 publications

(54 citation statements)

References 38 publications

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“…First, liquidity constraints could increase the marginal utility of consumption and reduce the willingness to take risks. Second, scarcity could have a direct effect on risk preferences per se (e.g., Tanaka et al 2010; Gloede, Menkhoff, and Waibel 2015). These effects could partly offset each other if scarcity reduced risk aversion.…”

Section: Resultsmentioning

confidence: 99%

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Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

Carvalho

Meier

Wang

2016

American Economic Review

405

371

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We study the effect of financial resources on decision-making. Low-income U.S. households are randomly assigned to receive an online survey before or after payday. The survey collects measures of cognitive function and administers risk and intertemporal choice tasks. The study design generates variation in cash, checking and savings balances, and expenditures. Before-payday participants behave as if they are more present-biased when making intertemporal choices about monetary rewards but not when making intertemporal choices about non-monetary real-effort tasks. Nor do we find before-after differences in risk-taking, the quality of decision-making, the performance in cognitive function tasks, or in heuristic judgments.

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Section: Resultsmentioning

confidence: 99%

“… 3 Lawrance 1991; Banerjee and Mullainathan 2010; Tanaka, Camerer, and Nguyen 2010; Spears 2011; Gloede, Menkhoff, and Waibel 2015; Bernheim, Ray, and Yeltekin 2015; Carvalho 2013; Haushofer, Schunk, and Fehr 2013. …”

mentioning

confidence: 99%

Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

Carvalho

Meier

Wang

2016

American Economic Review

405

371

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“…This leaves the question of what may be ultimately driving the negative between‐country correlation of aggregate risk tolerance with GDP per capita. The latter may appear puzzling in light of the prevalent finding of a positive correlation between risk tolerance and income at the individual level ( Donkers, Melenberg, and Van Soest (), Dohmen et al (), Gloede, Menkhoff, and Waibel (), Hopland, Matsen, and Strøm (), Vieider et al (, forthcoming )). Several recent papers have modeled economic growth as a function of risk tolerance ( Galor and Michalopoulos (), Doepke and Zilibotti (), Klasing ()).…”

Section: Resultsmentioning

confidence: 99%

All over the map: A worldwide comparison of risk preferences

l’Haridon¹,

Vieider²

2019

Quantitative Economics

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We obtain rich measurements of risk preferences for 2939 subjects across 30 countries, and use the data to paint a picture of the distribution of risk preferences across the globe using structural equation models. Reference-dependence and likelihood-dependence are found to be important everywhere. Model parameters in non-Western countries differ systematically from those in Western countries, with poorer countries substantially more risk tolerant than rich countries on average. We qualify previous findings on gender effects and cognitive ability by showing how they mainly impact likelihood-dependence. We further add novel evidence on the correlation between risk preferences and study major. Whereas we confirm previous results on observable characteristics of subjects explaining little of overall preference heterogeneity, a few macroeconomic indicators can explain a considerable part of the between-country heterogeneity.

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“…Perceiving one’s self as less vulnerable to poverty may be of greater subjective value than perceiving a widening gap between one’s income and the income of complete strangers, especially for risk averse individuals who value the reduction in vulnerability perhaps more so than they would a secular increase in income. The incorporation of behavioral characteristics into studies of vulnerability may be a fruitful area of inquiry, such as the recent work by Gloede et al (2015), and may provide the basis for new ways of contemplating rural households’ decisionmaking processes.…”

Section: Discussionmentioning

confidence: 99%

Transient Poverty, Poverty Dynamics, and Vulnerability to Poverty: An Empirical Analysis Using a Balanced Panel from Rural China

Ward

2016

World Development

129

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China’s economic reforms starting in the late 1970s have resulted in rapid economic growth, with annual growth in gross domestic product averaging greater than 10 percent per year for more than thirty years. Accompanying this rapid growth in national accounts have been rapid and widespread reductions in poverty. With these reductions in poverty, however, there has often been observed an increase in income inequality, both between as well as within rural and urban sectors. This rising income gap challenges the notion that economic reforms in China have been as successful as the poverty statistics would suggest. In this paper, we suggest that an alternative view would be to consider the effects of these reforms on changing the chronic nature of poverty and reducing household vulnerability to poverty. Using a balanced panel from rural China from 1991 through 2006, we find that most poverty among our sample has shifted from being chronic in nature to being transient, with households either shifting into a state of being non-poor moving in and out of poverty. Among our sample, vulnerability to poverty has been declining over time, but the declines are not uniform over time or space. We decompose household vulnerability status into two proximate causes: low expected income and high income variability, finding vulnerability increasingly due to income variability. Additionally, we demonstrate that vulnerable households have very different characteristics than non-vulnerable households.

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Shocks, Individual Risk Attitude, and Vulnerability to Poverty among Rural Households in Thailand and Vietnam

Cited by 100 publications

References 38 publications

Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

Poverty and Economic Decision-Making: Evidence from Changes in Financial Resources at Payday

All over the map: A worldwide comparison of risk preferences

Transient Poverty, Poverty Dynamics, and Vulnerability to Poverty: An Empirical Analysis Using a Balanced Panel from Rural China

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