IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-23-00318.html
   My bibliography  Save this article

The role of loss aversion in shaping environmental relocation decisions

Author

Listed:
  • Jiakun Zheng

    (Aix Marseille Univ, CNRS, AMSE, Centrale Marseille, Marseille, France.)

  • Yanyin Li

    (School of Finance, Renmin University of China)

Abstract

This paper utilizes data from the 2017 China Household Finance Survey (CHFS) to examine the impact of loss aversion on individuals' willingness to relocate due to environmental concerns. We find that individuals who are more loss averse are less likely to consider moving, resulting in what is called the status-quo bias. In addition, we find that individuals with stronger family ties as measured by the number of siblings and higher household fixed assets are more susceptible to these effects, implying that they are more attached to their current place of residence and less likely to relocate.

Suggested Citation

  • Jiakun Zheng & Yanyin Li, 2024. "The role of loss aversion in shaping environmental relocation decisions," Economics Bulletin, AccessEcon, vol. 44(4), pages 1263-1270.
    • Handle: RePEc:ebl:ecbull:eb-23-00318
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2024/Volume44/EB-24-V44-I4-P99.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ingrid Boas & Carol Farbotko & Helen Adams & Harald Sterly & Simon Bush & Kees Geest & Hanne Wiegel & Hasan Ashraf & Andrew Baldwin & Giovanni Bettini & Suzy Blondin & Mirjam Bruijn & David Durand-Del, 2019. "Climate migration myths," Nature Climate Change, Nature, vol. 9(12), pages 901-903, December.
    2. Matthew Rabin, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Econometrica, Econometric Society, vol. 68(5), pages 1281-1292, September.
    3. Peter Huber & Klaus Nowotny, 2020. "Risk aversion and the willingness to migrate in 30 transition countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(4), pages 1463-1498, October.
    4. Chen, Shuai & Oliva, Paulina & Zhang, Peng, 2022. "The effect of air pollution on migration: Evidence from China," Journal of Development Economics, Elsevier, vol. 156(C).
    5. Chi, Yichun & Zheng, Jiakun & Zhuang, Shengchao, 2022. "S-shaped narrow framing, skewness and the demand for insurance," Insurance: Mathematics and Economics, Elsevier, vol. 105(C), pages 279-292.
    6. Niu, Geng & Wang, Qi & Li, Han & Zhou, Yang, 2020. "Number of brothers, risk sharing, and stock market participation," Journal of Banking & Finance, Elsevier, vol. 113(C).
    7. Ana I. Balsa & Néstor Gandelman & Nicolás González, 2015. "Peer Effects in Risk Aversion," Risk Analysis, John Wiley & Sons, vol. 35(1), pages 27-43, January.
    8. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    9. Bálint Zsolt Nagy & Mónika Anetta Alt & Botond Benedek & Zsuzsa Săplăcan, 2020. "How do loss aversion and technology acceptance affect life insurance demand?," Applied Economics Letters, Taylor & Francis Journals, vol. 27(12), pages 977-981, June.
    10. Mark J. Browne & Annette Hofmann & Andreas Richter & Sophie-Madeleine Roth & Petra Steinorth, 2021. "Peer effects in risk preferences: Evidence from Germany," Annals of Operations Research, Springer, vol. 299(1), pages 1129-1163, April.
    11. Xuna Zhang & Shijing Nan & Shanbing Lu & Minna Wang, 2022. "Spatial Effects of Air Pollution on the Siting of Enterprises: Evidence from China," IJERPH, MDPI, vol. 19(21), pages 1-18, November.
    12. Jiakun Zheng, 2020. "Optimal insurance design under narrow framing," Post-Print hal-04227370, HAL.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hwang, In Do, 2024. "Behavioral aspects of household portfolio choice: Effects of loss aversion on life insurance uptake and savings," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1029-1053.
    2. Fey, Jan-Christian & Schmeiser, Hato & Schreiber, Florian, 2024. "Optimal insurance deductibles under limited information," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 202-221.
    3. Kerri Brick & Martine Visser & Justine Burns, 2012. "Risk Aversion: Experimental Evidence from South African Fishing Communities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 133-152.
    4. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 121(4), pages 1133-1165.
    5. Chorvat, Terrence, 2006. "Taxing utility," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(1), pages 1-16, February.
    6. Roberts, Michael J. & O'Donoghue, Erik J. & Key, Nigel D., 2003. "Chemical And Fertilizer Applications In Response To Crop Insurance: Evidence From Census Micro Data," 2003 Annual meeting, July 27-30, Montreal, Canada 21895, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Celse, Jeremy & Karakostas, Alexandros & Zizzo, Daniel John, 2023. "Relative risk taking and social curiosity," Journal of Economic Behavior & Organization, Elsevier, vol. 210(C), pages 243-264.
    8. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    9. Aloysius, John A., 2003. "Rational escalation of costs by playing a sequence of unfavorable gambles: the martingale," Journal of Economic Behavior & Organization, Elsevier, vol. 51(1), pages 111-129, May.
    10. Enrico Diecidue & Peter Wakker & Marcel Zeelenberg, 2007. "Eliciting decision weights by adapting de Finetti’s betting-odds method to prospect theory," Journal of Risk and Uncertainty, Springer, vol. 34(3), pages 179-199, June.
    11. Christiane Ernst & Christian Thöni, 2013. "Bimodal Bidding in Experimental All-Pay Auctions," Games, MDPI, vol. 4(4), pages 1-16, October.
    12. Franz Dietrich & Antonios Staras & Robert Sugden, 2021. "Savage’s response to Allais as Broomean reasoning," Journal of Economic Methodology, Taylor & Francis Journals, vol. 28(2), pages 143-164, April.
    13. Pedro Bordalo & Nicola Gennaioli & Andrei Shleifer, 2013. "Salience and Consumer Choice," Journal of Political Economy, University of Chicago Press, vol. 121(5), pages 803-843.
    14. Veld, Chris & Veld-Merkoulova, Yulia V., 2008. "The risk perceptions of individual investors," Journal of Economic Psychology, Elsevier, vol. 29(2), pages 226-252, April.
    15. Carrillo, Paul & Emran, M. Shahe, 2018. "Loss Aversion, Transaction Costs, or Audit Trigger? Learning about Corporate Tax Compliance from a Policy Experiment with Withholding Regime," MPRA Paper 87445, University Library of Munich, Germany.
    16. Brian Hill, 2009. "Confidence and ambiguity," Working Papers hal-00489870, HAL.
    17. Lehmann, Erik E. & Warning, Susanne, 2003. "The impact of gender on individual decisions: Evidence from the "Millionaire Show"," Discussion Papers, Series I 325, University of Konstanz, Department of Economics.
    18. Vjollca Sadiraj, 2014. "Probabilistic risk attitudes and local risk aversion: a paradox," Theory and Decision, Springer, vol. 77(4), pages 443-454, December.
    19. Eil, David & Lien, Jaimie W., 2014. "Staying ahead and getting even: Risk attitudes of experienced poker players," Games and Economic Behavior, Elsevier, vol. 87(C), pages 50-69.
    20. Fudenberg, Drew & Levine, David K. & Maniadis, Zacharias, 2014. "An approximate dual-self model and paradoxes of choice under risk," Journal of Economic Psychology, Elsevier, vol. 41(C), pages 55-67.

    More about this item

    Keywords

    Loss aversion; Willingness to relocate; Family ties; Status-quo bias.;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-23-00318. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.