| Abstract: |
This research explores the origins of loss aversion and the variation in its
prevalence across regions, nations and ethnic group. It advances the
hypothesis and establishes empirically that the evolution of loss aversion in
the course of human history can be traced to the adaptation of individuals to
the asymmetric effects of climatic shocks on reproductive success during the
Malthusian epoch. Exploiting variations in the degree of loss aversion among
second generation migrants in Europe and the US, as well as across precolonial
ethnic groups, the research establishes that consistent with the predictions
of the theory, individuals and ethnic groups that are originated in regions in
which climatic conditions tended to be spatially correlated, and thus shocks
were aggregate in nature, are characterized by greater intensity of loss
aversion, while descendants of regions marked by climatic volatility have
greater propensity towards loss-neutrality. |