| Abstract: |
This paper presents new evidence on the distribution of risk attitudes in the
population, using a novel set of survey questions and a representative sample
of roughly 22,000 individuals living in Germany. Using a question that asks
about willingness to take risks in general, on an 11-point scale, we find
evidence of heterogeneity across individuals, and show that willingness to
take risks is negatively related to age and being female, and positively
related to height and parental education. We test the behavioral relevance of
this survey measure by conducting a complementary field experiment, based on a
representative sample of 450 subjects, and find that the general risk question
is a good predictor of actual risk-taking behavior. We then use a more
standard lottery question to measure risk preferences in our sample of 22,000,
and find similar results regarding heterogeneity and determinants of risk
preferences, compared to the general risk question. The lottery question also
makes it possible to estimate the coefficient of relative risk aversion for
each individual in the sample. Using five questions about willingness to take
risks in specific domains - car driving, financial matters, sports and
leisure, career, and health - the paper also studies the impact of context on
risk attitudes, finding a strong but imperfect correlation across contexts.
Using data on a collection of risky behaviors from different contexts,
including traffic offenses, portfolio choice, smoking, occupational choice,
participation in sports, and migration, the paper compares the predictive
power of all of the risk measures. Strikingly, the general risk question
predicts all behaviors whereas the standard lottery measure does not. The best
predictor for any specific behavior is typically the corresponding
context-specific measure. |
| Keywords: |
Risk Preferences, Experimental Validation, Field Experiment, SOEP, Gender Differences, Context, Age, Height, Subjective Well-Being, Migration, Occupational Choice, Health |