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Risk attitudes across the life course: Evidence from China

Author

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  • Cheng, Lingguo
  • Lu, Yunfeng

Abstract

This study aims to estimate the age profile of risk attitudes in China while addressing the age-period-cohort (APC) identification problem. Using a nationally representative longitudinal household survey dataset from 2011 to 2019, we tackle the identification problem by proxying for the period effect with a variable that affects risk attitudes across periods while controlling for age and birth cohorts. We find that people’s willingness to take risks decreases almost linearly from early adulthood to old age in China. Heterogeneity analyses across demographic or socioeconomic groups reveal that the negative age pattern holds for all subgroups, though the rates of decline vary considerably across groups. In general, the age profile of risk attitudes in China aligns with the findings in Western countries while demonstrating a considerable discrepancy in the slope size.

Suggested Citation

  • Cheng, Lingguo & Lu, Yunfeng, 2024. "Risk attitudes across the life course: Evidence from China," China Economic Review, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:chieco:v:88:y:2024:i:c:s1043951x2400172x
    DOI: 10.1016/j.chieco.2024.102283
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    More about this item

    Keywords

    Risk attitudes; Age profile; Age-period-cohort identification problem; China;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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