The Dynamic Properties of Economic Preferences

Abstract

Ulf Zölitz, and participants in various seminars and conferences. An earlier version of this paper circulated as "A structured approach to testing the stability of individual preferences".

Do Risk Preferences Change? Evidence from the Great East Japan Earthquake

“…The attrition and migration rates are fairly low at 7 percent and 1 percent. 20 The reason for the low migration rate is because the respondents whose municipality of residence differs between the two years but were dropped from the 2012 sample are counted not as migration but as attrition. We demonstrate in Subsection IIIC that attrition and migration do not seem to affect our results.…”

“…The estimates are quantitatively unchanged (the results are available upon request). 20 The reasons for attrition in 2012 and 2016 surveys are as follows (however, breakdown by gender is not available): refused (51.3 percent and 50.3 percent), moved away (22.9 percent and 18.2 percent), temporarily absent (7.2 percent and 4.9 percent), and others (18.6 percent and 18.9 percent). 21 We start with 3,040 subjects with no missing values for the lottery question, risk-taking behavior, age, gender, and household income in both 2011 and 2016 surveys.…”

Risk preference dynamics around life events

“…2 There is also little evidence around bereavement. Two studies find no statistically significant relationship for the death of a spouse (Browne et al, 2016;Salamanca, 2016) although neither allows for the possibility of dynamics in the response function.…”

“…Death of a spouse is not statistically significant. Salamanca (2016) Index based on six items related to financial risk taking. Survey (1996Survey ( -2015.…”

“…Some researchers have suggested that underlying preferences are relatively stable and that variation over the life course is largely noise (e.g. Sahm, 2012;Salamanca, 2016). On the other hand, evidence of a deterministic component comes from research that links shifts in risk preferences to significant natural events such as hurricanes, floods, earthquakes and tsunamis (Eckel et al, 2009;Page et al, 2014;Cameron & Shah, 2015;Said et al, 2015;Cassar et al, 2017;Hanaoka et al, 2018) as well as more frequent life experiences such as health shocks (Decker & Schmidtz, 2016), exposure to violent crime and conflict (Voors et al, 2012;Brown et al, 2017), parenthood (Görlitz & Tamm, 2015;Browne et al, 2016) and changes in financial circumstances (Anderson et al, 2008).…”