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Time preferences and risk aversion: Tests on domain differences

Author

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  • Christos A. Ioannou

    (University of Southampton)

  • Jana Sadeh

    (University of Southampton)

Abstract

Understanding how individuals discount and evaluate the risks of environmental outcomes is a prime component in designing effective environmental policy. We use an incentivized experimental design to investigate whether subjects’ time preferences and risk aversion across the monetary and environmental domains differ. We find that subjects’ time preferences are not significantly different across the two domains. In contrast, subjects exhibit a higher degree of risk aversion in the environmental domain. Furthermore, we corroborate earlier results, documenting that women are more risk averse than men in the monetary domain, and show this finding to also hold in the environmental domain.

Suggested Citation

  • Christos A. Ioannou & Jana Sadeh, 2016. "Time preferences and risk aversion: Tests on domain differences," Journal of Risk and Uncertainty, Springer, vol. 53(1), pages 29-54, August.
    • Handle: RePEc:kap:jrisku:v:53:y:2016:i:1:d:10.1007_s11166-016-9245-8
    DOI: 10.1007/s11166-016-9245-8
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    Cited by:

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    2. repec:cup:judgdm:v:14:y:2019:i:5:p:591-604 is not listed on IDEAS
    3. Dániel Horn & Hubert János Kiss, 2020. "Time preferences and their life outcome correlates: Evidence from a representative survey," PLOS ONE, Public Library of Science, vol. 15(7), pages 1-26, July.
    4. Mohammed Abdellaoui & Cédric Gutierrez & Emmanuel Kemel, 2018. "Temporal discounting of gains and losses of time: An experimental investigation," Journal of Risk and Uncertainty, Springer, vol. 57(1), pages 1-28, August.
    5. Schrieks, Teun & Botzen, W.J. Wouter & Haer, Toon & Aerts, Jeroen C.J.H., 2024. "Drought risk attitudes in pastoral and agro-pastoral communities in Kenya," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 108(C).
    6. David Bradford & Charles Courtemanche & Garth Heutel & Patrick McAlvanah & Christopher Ruhm, 2017. "Time preferences and consumer behavior," Journal of Risk and Uncertainty, Springer, vol. 55(2), pages 119-145, December.
    7. Muhammad Sajid & Matthew C. Li, 2019. "The role of cognitive reflection in decision making: Evidence from Pakistani managers," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(5), pages 591-604, September.
    8. Daniel Horn & Hubert Kiss Janos, 2020. "Do individuals with children value the future more?," CERS-IE WORKING PAPERS 2010, Institute of Economics, Centre for Economic and Regional Studies.
    9. W. David Bradford & Paul Dolan & Matteo M. Galizzi, 2019. "Looking ahead: Subjective time perception and individual discounting," Journal of Risk and Uncertainty, Springer, vol. 58(1), pages 43-69, February.
    10. Thomas, Ranjeeta & Galizzi, Matteo M. & Moorhouse, Louisa & Nyamukapa, Constance & Hallett, Timothy B., 2024. "Do risk, time and prosocial preferences predict risky sexual behaviour of youths in a low-income, high-risk setting?," Journal of Health Economics, Elsevier, vol. 93(C).
    11. Masahide Watanabe & Toshio Fujimi, 2024. "Ambiguity attitudes toward natural and artificial sources in gain and loss domains," Journal of Risk and Uncertainty, Springer, vol. 68(1), pages 51-75, February.
    12. Yang Wang & Frank A. Sloan, 2018. "Present bias and health," Journal of Risk and Uncertainty, Springer, vol. 57(2), pages 177-198, October.
    13. Kristoffer Panduro Madsen & Trine Kjær, 2024. "Do time preferences predict diabetes outcomes? A combined survey and register‐based study," Health Economics, John Wiley & Sons, Ltd., vol. 33(9), pages 1949-1961, September.
    14. Thomas Meissner & Xavier Gassmann & Corinne Faure & Joachim Schleich, 2023. "Individual characteristics associated with risk and time preferences: A multi country representative survey," Journal of Risk and Uncertainty, Springer, vol. 66(1), pages 77-107, February.
    15. Alina Ferecatu & Ayse Önçüler, 2016. "Heterogeneous risk and time preferences," Journal of Risk and Uncertainty, Springer, vol. 53(1), pages 1-28, August.
    16. Matteo M. Galizzi & Marisa Miraldo & Charitini Stavropoulou, 2016. "In Sickness but Not in Wealth," Medical Decision Making, , vol. 36(4), pages 503-517, May.
    17. Emmanouil Mentzakis & Jana Sadeh, 2021. "Experimental evidence on the effect of incentives and domain in risk aversion and discounting tasks," Journal of Risk and Uncertainty, Springer, vol. 62(3), pages 203-224, June.

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    More about this item

    Keywords

    Risk and time; Discounting; Risk aversion; Domain differences; Environmental domain;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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