IDEAS home Printed from https://ideas.repec.org/a/kap/fmktpm/v30y2016i1d10.1007_s11408-016-0260-1.html
   My bibliography  Save this article

Further examination of the demographic and social factors affecting risk aversion

Author

Listed:
  • Tchai Tavor

    (The Max Stern Yezreel Valley Academic College)

  • Sharon Garyn-Tal

    (The Max Stern Yezreel Valley Academic College)

Abstract

In this paper we examine how social and demographic factors explain risk aversion. Specifically, we focus on how an individual’s place of residence effects his level of risk aversion. Israel is a natural experiment field for such an investigation since the majority of its population lives either in big or small cities, moshavs, or kibbutzim, where the last two forms of settlement being unique to Israel. The kibbutz follows the prototype of a collectivist culture; the moshav follows the prototype of an individualistic culture. This environment also allows us to reexamine the contradiction between the “cushion hypothesis” and previous findings regarding the risk aversion of Israeli kibbutz residents. In general, we find that the moshav respondents demonstrate the lowest level of risk aversion and the kibbutz (and the small city) respondents demonstrate the highest. However, further examination reveals that the risk aversions are domain specific. The urban residents of both big and small cites are similar to each other than they are to residents of the kibbutz and the moshav, who, in turn, are more similar to each other than they are to the urban residents. For example, kibbutz and moshav respondents are less risk averse in insurance and gambling, but more risk averse in driving and sport, compared to urban residents. Interestingly, on average, the respondents demonstrate the highest level of risk aversion for extreme sports and the lowest level of risk aversion for irresponsible driving.

Suggested Citation

  • Tchai Tavor & Sharon Garyn-Tal, 2016. "Further examination of the demographic and social factors affecting risk aversion," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(1), pages 95-110, February.
  • Handle: RePEc:kap:fmktpm:v:30:y:2016:i:1:d:10.1007_s11408-016-0260-1
    DOI: 10.1007/s11408-016-0260-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11408-016-0260-1
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11408-016-0260-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Julie Barnett & Glynis M. Breakwell, 2001. "Risk Perception and Experience: Hazard Personality Profiles and Individual Differences," Risk Analysis, John Wiley & Sons, vol. 21(1), pages 171-178, February.
    2. Kimmo Eriksson & Brent Simpson, 2010. "Emotional reactions to losing explain gender differences in entering a risky lottery," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 5(3), pages 159-163, June.
    3. Rosenboim, Mosi & Shavit, Tal & Shoham, Amir, 2010. "Financial decision making in collective society--A field test on Israeli kibbutz members and city residents," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 30-36, January.
    4. Siegrist, Michael & Cvetkovich, George & Gutscher, Heinz, 2002. "Risk Preference Predictions and Gender Stereotypes," Organizational Behavior and Human Decision Processes, Elsevier, vol. 87(1), pages 91-102, January.
    5. Paul Slovic & Torbjörn Malmfors & Daniel Krewski & C. K. Mertz & Nancy Neil & Sheryl Bartlett, 1995. "Intuitive Toxicology. II. Expert and Lay Judgments of Chemical Risks in Canada," Risk Analysis, John Wiley & Sons, vol. 15(6), pages 661-675, December.
    6. Marshall, Roger & Huan, Tzung-Cheng (T.C.) & Xu, Yingzi & Nam, Inwoo, 2011. "Extending prospect theory cross-culturally by examining switching behavior in consumer and business-to-business contexts," Journal of Business Research, Elsevier, vol. 64(8), pages 871-878, August.
    7. repec:cup:judgdm:v:5:y:2010:i:3:p:159-163 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonín PavlÃ­Ä ek & Aneta BobeniÄ HintoÅ¡ová & FrantiÅ¡ek Sudzina, 2021. "Impact of Personality Traits and Demographic Factors on Risk Attitude," SAGE Open, , vol. 11(4), pages 21582440211, December.
    2. Ploeg, Matthias & Knoben, Joris & Vermeulen, Patrick, 2022. "We are in it together: Communitarianism and the performance-innovation relationship✰," Research Policy, Elsevier, vol. 51(5).

    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. Branden B. Johnson, 2008. "Public Views on Drinking Water Standards as Risk Indicators," Risk Analysis, John Wiley & Sons, vol. 28(6), pages 1515-1530, December.
    2. Sisira S. Withanachchi & Ilia Kunchulia & Giorgi Ghambashidze & Rami Al Sidawi & Teo Urushadze & Angelika Ploeger, 2018. "Farmers’ Perception of Water Quality and Risks in the Mashavera River Basin, Georgia: Analyzing the Vulnerability of the Social-Ecological System through Community Perceptions," Sustainability, MDPI, vol. 10(9), pages 1-26, August.
    3. Loredana Antronico & Roberto Coscarelli & Francesco De Pascale & Giovanni Gull?, 2018. "La comunicazione del rischio e la percezione pubblica dei disastri: il caso studio della frana di Maierato (Calabria, Italia)," PRISMA Economia - Societ? - Lavoro, FrancoAngeli Editore, vol. 2018(3), pages 9-29.
    4. Nicolás C. Bronfman & Luis Abdón Cifuentes & Michael L. deKay & Henry H. Willis, 2007. "Accounting for Variation in the Explanatory Power of the Psychometric Paradigm: The Effects of Aggregation and Focus," Journal of Risk Research, Taylor & Francis Journals, vol. 10(4), pages 527-554, June.
    5. Leuermann, Andrea & Roth, Benjamin, 2012. "Does good advice come cheap? - On the assessment of risk preferences in the lab and the field," Working Papers 0534, University of Heidelberg, Department of Economics.
    6. Henry H. Willis & Michael L. DeKay & Baruch Fischhoff & M. Granger Morgan, 2005. "Aggregate, Disaggregate, and Hybrid Analyses of Ecological Risk Perceptions," Risk Analysis, John Wiley & Sons, vol. 25(2), pages 405-428, April.
    7. Antoine Marsaudon & Lise Rochaix, 2017. "Impact of acute health shocks on cigarette consumption
      [Impact d'un choc de santé sur la consommation de cigarette]
      ," PSE Working Papers halshs-01626024, HAL.
    8. Morioka, Rika, 2014. "Gender difference in the health risk perception of radiation from Fukushima in Japan: The role of hegemonic masculinity," Social Science & Medicine, Elsevier, vol. 107(C), pages 105-112.
    9. Angelo Panno & Annalisa Theodorou & Giuseppe Alessio Carbone & Evelina De Longis & Chiara Massullo & Gianluca Cepale & Giuseppe Carrus & Claudio Imperatori & Giovanni Sanesi, 2021. "Go Greener, Less Risk: Access to Nature Is Associated with Lower Risk Taking in Different Domains during the COVID-19 Lockdown," Sustainability, MDPI, vol. 13(19), pages 1-17, September.
    10. Detlefsen, Lena & Friedl, Andreas & Lima de Miranda, Katharina & Schmidt, Ulrich & Sutter, Matthias, 2018. "Are Economic Preferences Shaped by the Family Context? The Impact of Birth Order and Siblings' Sex Composition on Economic Preferences," IZA Discussion Papers 11949, Institute of Labor Economics (IZA).
    11. Wang, Gang & Holmes, R. Michael & Devine, Richard A. & Bishoff, John, 2018. "CEO gender differences in careers and the moderating role of country culture: A meta-analytic investigation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 148(C), pages 30-53.
    12. Meredith Frances Dobbie & Rebekah Ruth Brown, 2014. "A Framework for Understanding Risk Perception, Explored from the Perspective of the Water Practitioner," Risk Analysis, John Wiley & Sons, vol. 34(2), pages 294-308, February.
    13. repec:cup:judgdm:v:6:y:2011:i:6:p:542-551 is not listed on IDEAS
    14. Pikulina, E.S., 2014. "Incentives, behavioral biases, and risk taking," Other publications TiSEM 3473e2b3-2425-449c-95e2-4, Tilburg University, School of Economics and Management.
    15. Wu, Laurie & Lee, Christopher, 2016. "Limited Edition for Me and Best Seller for You: The Impact of Scarcity versus Popularity Cues on Self versus Other-Purchase Behavior," Journal of Retailing, Elsevier, vol. 92(4), pages 486-499.
    16. Wim Kellens & Ruud Zaalberg & Tijs Neutens & Wouter Vanneuville & Philippe De Maeyer, 2011. "An Analysis of the Public Perception of Flood Risk on the Belgian Coast," Risk Analysis, John Wiley & Sons, vol. 31(7), pages 1055-1068, July.
    17. Ling Tian & Peng Yao & Shi-jie Jiang, 2014. "Perception of earthquake risk: a study of the earthquake insurance pilot area in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 74(3), pages 1595-1611, December.
    18. Okumah, Murat & Yeboah, Ata Senior & Bonyah, Sylvester Kwaku, 2020. "What matters most? Stakeholders’ perceptions of river water quality," Land Use Policy, Elsevier, vol. 99(C).
    19. Xuemei Fang & Liang Cao & Luyi Zhang & Binbin Peng, 2023. "Risk perception and resistance behavior intention of residents living near chemical industry parks: an empirical analysis in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 115(2), pages 1655-1675, January.
    20. Angela Bearth & Linda Miesler & Michael Siegrist, 2017. "Consumers’ Risk Perception of Household Cleaning and Washing Products," Risk Analysis, John Wiley & Sons, vol. 37(4), pages 647-660, April.
    21. Shi, Xiaojun & Yan, Zhu, 2018. "Urbanization and risk preference in China: A decomposition of self-selection and assimilation effects," China Economic Review, Elsevier, vol. 49(C), pages 210-228.

    More about this item

    Keywords

    Risk aversion; Place of residence; Collective and individualistic cultures; The cushion hypothesis;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Z1 - Other Special Topics - - Cultural 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:kap:fmktpm:v:30:y:2016:i:1:d:10.1007_s11408-016-0260-1. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.