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The Intergenerational Transmission of Risk and Trust Attitudes

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Author Info
Thomas Dohmen () (IZA Bonn)
Armin Falk () (IZA Bonn, University of Bonn, and CEPR)
David Huffman () (IZA Bonn)
Uwe Sunde () (IZA Bonn, University of Bonn, and CEPR)

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Abstract

We investigate whether two crucial determinants of economic decision making – willingness to take risks and willingness to trust other people – are transmitted from parents to children. Our evidence is based on survey questions that ask about these attitudes directly, and are good measures in the sense that they reliably predict actual risk-taking and trusting behavior in large-scale, incentive compatible field experiments. We find a strong, significant, and robust correlation between the responses of parents and their children. Exploring heterogeneity in the strength of transmission, we find that gender of the child does not matter, but that children with fewer siblings, and firstborn children, are more strongly influenced by parents in terms of risk attitudes. Interestingly, for trust there is no impact of family size or birth order. There is some evidence of ‘receptive’ types: children who are similar to the father are similar to the mother, and children who are similar to parents in terms of risk are similar in terms of trust. We find that the transmission from parents to children is relatively specific, judging by questions that ask about willingness to take risks in specific contexts – financial matters, health, career, car driving, and leisure activities. Finally, we provide evidence of positive assortative mating based on risk and trust attitudes, which reinforces the impact of parents on children. Our results have potentially important implications for understanding the mechanisms underlying cultural transmission, social mobility, and persistent differences in behavior across countries. More generally, our findings shed light on the basic question of where attitudes towards risk and trust come from.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2380.

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Length: 43 pages
Date of creation: Oct 2006
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Handle: RePEc:iza:izadps:dp2380

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Related research
Keywords: risk preferences; trust; intergenerational transmission; cultural transmission; assortative mating; social mobility; GSOEP;

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Find related papers by JEL classification:
D1 - Microeconomics - - Household Behavior
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
J62 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Job, Occupational and Intergenerational Mobility; Promotion
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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