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Violence, psychological trauma, and risk attitudes: Evidence from victims of violence in Colombia

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  • Moya, Andrés

Abstract

Traumatic experiences can alter individuals' behavior and deplete their ability to make economic decisions. In this article, I analyze the effects of violence on risk attitudes. For this purpose, I sampled a group of victims of violence in Colombia and collected data on the severity and temporal proximity of their exposure to violence and on their symptoms of psychological trauma. I find that more severe violence brings about higher levels of risk aversion in the gains and ambiguity domains but that the behavioral effect is not permanent. I also find that the effect is driven by severe anxiety disorders, which is consistent with studies in psychology. The results suggest that violence can affect poverty dynamics through a behavioral channel. (JEL: D1; C9; O1; I1; I3).

Suggested Citation

  • Moya, Andrés, 2018. "Violence, psychological trauma, and risk attitudes: Evidence from victims of violence in Colombia," Journal of Development Economics, Elsevier, vol. 131(C), pages 15-27.
    • Handle: RePEc:eee:deveco:v:131:y:2018:i:c:p:15-27
    DOI: 10.1016/j.jdeveco.2017.11.001
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    More about this item

    Keywords

    Risk aversion; Violence; Psychological trauma; Colombia;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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