Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the HRS

TitlePreference Parameters and Behavioral Heterogeneity: An Experimental Approach in the HRS
Publication TypeJournal Article
Year of Publication1997
AuthorsBarsky, R, Kimball, MS, F. Juster, T, Shapiro, MD
JournalQuarterly Journal of Economics
Call Numberpubs_1997_Barsky_RQuartJourEcon.pdf
KeywordsEnd of life decisions, Health Conditions and Status, Retirement Planning and Satisfaction

This paper reports measures of preference parameters relating to risk tolerance, time preference, and intertemporal substitution. These measures are based on survey responses to hypothetical situations constructed using an economic theorist's concept of the underlying parameters. The individual measures of preference parameters display heterogeneity. Estimated risk tolerance and the elasticity of intertemporal substitution are essentially uncorrelated across individuals. Measured risk tolerance is positively related to risky behaviors, including smoking, drinking, failing to have insurance, and holding stocks rather than Treasury bills. These relationships are both statistically and quantitatively significant, although measured risk tolerance explains only a small fraction of the variation of the studied behaviors.

Endnote Keywords

Criteria for Decision Making under Risk and Uncertainty/Health Production--Nutrition, Mortality, Morbidity, Disability, and Economic Behavior/Retirement/Retirement Policies/Health/Retirement/Smoking

Endnote ID


Citation Key6582