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The prevalence of prudence in a risky occupation

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  • Schaap, Robbert-Jan

Abstract

In this paper I present the first experimental measurement of prudence with a subject pool that is active in a high-risk occupation. Using a lab-in-the-field experiment I measure the prevalence of prudent preferences among 423 Chilean small-scale fishers. The prevalence of prudence in this sample is significantly lower than that found in previously measured samples. The key findings are that prudence (1) correlates with preferences for more secure occupations and (2) decreases strongly with the tenure and age of the fisher. I show that these findings are robust when controlling for risk aversion.

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  • Schaap, Robbert-Jan, 2021. "The prevalence of prudence in a risky occupation," Economics Letters, Elsevier, vol. 207(C).
    • Handle: RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521002962
    DOI: 10.1016/j.econlet.2021.110019
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    More about this item

    Keywords

    Prudence; Fisheries; Natural resources; Self-insurance;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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