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Parenting is risky business: parental risk attitudes in small stakes decisions on behalf of their children

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  • Franziska Ziegelmeyer

    (Georg-August-Universität Göttingen)

  • Michael Ziegelmeyer

    (Munich Center for the Economics of Aging)

Abstract

Parents often face risk when making decisions on behalf of their children, since outcomes may affect child development. We perform an incentive-compatible field experiment using the Holt and Laury (Am Econ Rev 92(5):1644–1655, 2002) design to elicit parental risk preferences in a stewardship decision framework. Multivariate analysis using different estimation techniques suggests that parents are significantly more risk-averse when deciding for their child than for themselves. Higher risk aversion is linked to characteristics of parents, not of children. Mood and gender of the deciding parent play a key role. If these results also hold for larger stakes, insights from this study could help to improve decision environments for parents to limit inequality between children due to diverging parental risk preferences.

Suggested Citation

  • Franziska Ziegelmeyer & Michael Ziegelmeyer, 2016. "Parenting is risky business: parental risk attitudes in small stakes decisions on behalf of their children," Review of Economics of the Household, Springer, vol. 14(3), pages 599-623, September.
    • Handle: RePEc:kap:reveho:v:14:y:2016:i:3:d:10.1007_s11150-014-9245-x
    DOI: 10.1007/s11150-014-9245-x
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    References listed on IDEAS

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    Cited by:

    1. Matteo Migheli, 2021. "Green purchasing: the effect of parenthood and gender," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(7), pages 10576-10600, July.
    2. Armin Falk & Anke Becker & Thomas Dohmen & David Huffman & Uwe Sunde, 2023. "The Preference Survey Module: A Validated Instrument for Measuring Risk, Time, and Social Preferences," Management Science, INFORMS, vol. 69(4), pages 1935-1950, April.
    3. Lau Lilleholt, 2019. "Cognitive ability and risk aversion: A systematic review and meta analysis," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(3), pages 234-279, May.
    4. Yang, Xiaojun & Carlsson, Fredrik, 2021. "Are People More Patient with Their Spouse's Money? An Experimental Study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 94(C).
    5. repec:cup:judgdm:v:14:y:2019:i:3:p:234-279 is not listed on IDEAS

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    More about this item

    Keywords

    Risk preference; Parents; Children; Lottery choice; Experiment; Survey;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D10 - Microeconomics - - Household Behavior - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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