Demography of Risk Aversion

TitleDemography of Risk Aversion
Publication TypeJournal Article
Year of Publication2001
AuthorsHalek, M, Eisenhauer, JG
JournalJournal of Risk and Insurance
Call Numberpubs_2001_Halek-Eisenhauer2001.pdf
KeywordsDemographics, Insurance, Net Worth and Assets, Risk Taking

This paper uses HRS data to empirically estimate the model of risk aversion and examines attitudes to both pure and speculative risks across various segments of the population. Results show that those individuals that had already engaged in the risk-taking behavior of migrating across national borders (i.e.- non-natives) are significantly more inclined than natives to both pure and speculative risks. Similarly, those who are currently employed exhibit a significantly greater willingness to gamble their current income for a chance to double it. These findings, along with the fact that women seem to be significantly more risk adverse than men, are in agreement with earlier studies and were expected. Other results, that were not as expected, show that the self-employed are significantly more adverse to pure risks than those employed by others, yet the two groups are not significantly different in their attitudes toward speculative risks. Similarly, education seems to increase aversion to pure risks but also increases the willingness to accept speculative risks. In terms of the causal relationship between risk aversion and personal characteristics, it is clear that purely demographic variables affect an individual s degree of risk aversion and that differences in religious beliefs affect attitudes toward risk-taking. Other variables produced statistically significant relationships, but causality cannot be determined.

Endnote Keywords

Risk Aversion/Risk Behavior/Economic Status/Life Insurance policies/Immigrants

Endnote ID


Citation Key6758