IDEAS home Printed from https://ideas.repec.org/a/kap/reveho/v17y2019i2d10.1007_s11150-018-9437-x.html
   My bibliography  Save this article

Parental risk aversion and educational investment: panel evidence from rural Uganda

Author

Listed:
  • Rayner Tabetando

    (National Graduate Institute for Policy Studies
    JICA Research Institute)

Abstract

In this paper we combine a unique large scale field experimental data on preferences and longitudinal household survey data from rural Uganda to estimate the impact of parental risk aversion, time preferences and loss aversion on educational investment. Our results show that parental risk aversion is increasing in wealth. On a whole, we find that risk aversion is positively correlated with educational investment measured in per school age child educational expenditure. Further analysis revealed that parental risk aversion is negatively associated with educational investment for poorer households. Pathway analysis suggests that risk averse households are less credit constrained. The hypothesis that parental risk aversion depresses educational investment may only be tenable for poor households’ in rural Uganda.

Suggested Citation

  • Rayner Tabetando, 2019. "Parental risk aversion and educational investment: panel evidence from rural Uganda," Review of Economics of the Household, Springer, vol. 17(2), pages 647-670, June.
    • Handle: RePEc:kap:reveho:v:17:y:2019:i:2:d:10.1007_s11150-018-9437-x
    DOI: 10.1007/s11150-018-9437-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11150-018-9437-x
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11150-018-9437-x?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. Christian Belzil & Jörgen Hansen, 2004. "Earnings Dispersion, Risk Aversion And Education," Research in Labor Economics, in: Accounting for Worker Well-Being, pages 335-358, Emerald Group Publishing Limited.
    2. Esther Duflo & Michael Kremer & Jonathan Robinson, 2011. "Nudging Farmers to Use Fertilizer: Theory and Experimental Evidence from Kenya," American Economic Review, American Economic Association, vol. 101(6), pages 2350-2390, October.
    3. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2010. "Are Risk Aversion and Impatience Related to Cognitive Ability?," American Economic Review, American Economic Association, vol. 100(3), pages 1238-1260, June.
    4. Belzil, Christian & Leonardi, Marco, 2007. "Can risk aversion explain schooling attainments? Evidence from Italy," Labour Economics, Elsevier, vol. 14(6), pages 957-970, December.
    5. Yuki Tanaka & Alistair Munro, 2014. "Regional Variation in Risk and Time Preferences: Evidence from a Large-scale Field Experiment in Rural Uganda," Journal of African Economies, Centre for the Study of African Economies, vol. 23(1), pages 151-187.
    6. Quang Nguyen & Colin Camerer & Tomomi Tanaka, 2010. "Risk and Time Preferences Linking Experimental and Household Data from Vietnam," Post-Print halshs-00547090, HAL.
    7. Stephan Meier & Charles Sprenger, 2010. "Present-Biased Preferences and Credit Card Borrowing," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 193-210, January.
    8. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    9. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    10. Marco Leonardi, 2007. "Do Parents Risk Aversion and Wealth Explalin Secondary School Choice?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 66(2), pages 177-206, July.
    11. Sawada, Yasuyuki & Lokshin, Michael, 2009. "Obstacles to school progression in rural Pakistan: An analysis of gender and sibling rivalry using field survey data," Journal of Development Economics, Elsevier, vol. 88(2), pages 335-347, March.
    12. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    13. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    14. Holden, Stein T. & Shiferaw, Bekele & Wik, Mette, 1998. "Poverty, market imperfections and time preferences: of relevance for environmental policy?," Environment and Development Economics, Cambridge University Press, vol. 3(1), pages 105-130, February.
    15. T. Paul Schultz, 1993. "Investments in the Schooling and Health of Women and Men: Quantities and Returns," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 694-734.
    16. Lincove, Jane Arnold, 2012. "The influence of price on school enrollment under Uganda's policy of free primary education," Economics of Education Review, Elsevier, vol. 31(5), pages 799-811.
    17. Galizzi, Matteo M. & Machado, Sara R. & Miniaci, Raffaele, 2016. "Temporal stability, cross-validity, and external validity of risk preferences measures: experimental evidence from a UK representative sample," LSE Research Online Documents on Economics 67554, London School of Economics and Political Science, LSE Library.
    18. Checchi, Daniele & Fiorio, Carlo V. & Leonardi, Marco, 2014. "Parents' risk aversion and children's educational attainment," Labour Economics, Elsevier, vol. 30(C), pages 164-175.
    19. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    20. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
    21. Levhari, David & Weiss, Yoram, 1974. "The Effect of Risk on the Investment in Human Capital," American Economic Review, American Economic Association, vol. 64(6), pages 950-963, December.
    22. Tomomi Tanaka & Colin F. Camerer & Quang Nguyen, 2010. "Risk and Time Preferences: Linking Experimental and Household Survey Data from Vietnam," American Economic Review, American Economic Association, vol. 100(1), pages 557-571, March.
    23. Steffen Andersen & Glenn W. Harrison & Morten I. Lau & E. Elisabet Rutström, 2008. "Lost In State Space: Are Preferences Stable?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 1091-1112, August.
    24. Jordan Chamberlin & Jacob Ricker-Gilbert, 2016. "Participation in Rural Land Rental Markets in Sub-Saharan Africa: Who Benefits and by How Much? Evidence from Malawi and Zambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1507-1528.
    25. Stefan Zeisberger & Dennis Vrecko & Thomas Langer, 2012. "Measuring the time stability of Prospect Theory preferences," Theory and Decision, Springer, vol. 72(3), pages 359-386, March.
    26. Deininger, Klaus, 2003. "Does cost of schooling affect enrollment by the poor? Universal primary education in Uganda," Economics of Education Review, Elsevier, vol. 22(3), pages 291-305, June.
    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. Basu, Arnab & Dimova, Ralitza & Gbakou, Monnet & Viennet, Romane, 2023. "Parental risk preferences, maternal bargaining power, and the educational progressions of children: Lab-in-the-field evidence from rural Côte d'Ivoire," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
    2. Ye, Juntao & Cai, Liming & Shi, Xinjie & Cheng, Mingwang, 2024. "Pursuing a brighter future: Impact of the Hukou reform on human capital investment in migrant children in China," China Economic Review, Elsevier, vol. 85(C).
    3. Raymond Boadi Frempong & David Stadelmann, 2021. "Risk preference and child labor: Econometric evidence," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 878-894, May.
    4. François-Charles Wolff, 2020. "The intergenerational transmission of risk attitudes: Evidence from Burkina Faso," Review of Economics of the Household, Springer, vol. 18(1), pages 181-206, March.
    5. Basu, Arnab K. & Dimova, Ralitza, 2021. "Household Preferences and Child Labor in Rural Ethiopia," IZA Discussion Papers 14062, Institute of Labor Economics (IZA).
    6. Patrick Opoku Asuming, 2023. "Risk attitudes and asset diversification: Evidence from Ghana," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(5), pages 915-960, July.

    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. Joshua Tasoff & Wenjie Zhang, 2022. "The Performance of Time-Preference and Risk-Preference Measures in Surveys," Management Science, INFORMS, vol. 68(2), pages 1149-1173, February.
    2. Jonathan Chapman & Erik Snowberg & Stephanie Wang & Colin Camerer, 2018. "Loss Attitudes in the U.S. Population: Evidence from Dynamically Optimized Sequential Experimentation (DOSE)," NBER Working Papers 25072, National Bureau of Economic Research, Inc.
    3. Sepahvand, Mohammad & Shahbazian, Roujman, 2017. "Individual’s Risk Attitudes in sub-Saharan Africa: Determinants and Reliability of Self-reported Risk in Burkina Faso," Working Paper Series 2017:11, Uppsala University, Department of Economics.
    4. Sheremenko, Ganna & Magnan, Nicholas, 2015. "Gender-specific Risk Preferences and Fertilizer Use in Kenyan Farming Households," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205766, Agricultural and Applied Economics Association.
    5. 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.
    6. Menkhoff, Lukas & Sakha, Sahra, 2014. "Multiple-item risk measures," Kiel Working Papers 1980, Kiel Institute for the World Economy (IfW Kiel).
    7. Eckel, Catherine & Johnson, Cathleen & Montmarquette, Claude, 2013. "Human capital investment by the poor: Informing policy with laboratory experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 224-239.
    8. Checchi, Daniele & Fiorio, Carlo V. & Leonardi, Marco, 2014. "Parents' risk aversion and children's educational attainment," Labour Economics, Elsevier, vol. 30(C), pages 164-175.
    9. Herrmann, Tabea & Hübler, Olaf & Menkhoff, Lukas & Schmidt, Ulrich, 2016. "Allais for the poor," Kiel Working Papers 2036, Kiel Institute for the World Economy (IfW Kiel).
    10. Oswald, Yvonne & Backes-Gellner, Uschi, 2014. "Learning for a bonus: How financial incentives interact with preferences," Journal of Public Economics, Elsevier, vol. 118(C), pages 52-61.
    11. Freudenreich, Hanna & Musshoff, Oliver & Wiercinski, Ben, 2017. "The Relationship between Farmers' Shock Experiences and their Uncertainty Preferences - Experimental Evidence from Mexico," GlobalFood Discussion Papers 256212, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    12. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    13. Heutel, Garth, 2019. "Prospect theory and energy efficiency," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 236-254.
    14. Reyes, René & Nelson, Harry & Zerriffi, Hisham, 2021. "How do decision makers´ ethnicity and religion influence the use of forests? Evidence from Chile," Forest Policy and Economics, Elsevier, vol. 128(C).
    15. James Alm & Antoine Malézieux, 2021. "40 years of tax evasion games: a meta-analysis," Experimental Economics, Springer;Economic Science Association, vol. 24(3), pages 699-750, September.
    16. Christian Belzil & Marco Leonardi, 2013. "Risk Aversion and Schooling Decisions," Annals of Economics and Statistics, GENES, issue 111-112, pages 35-70.
    17. Pablo Brañas-Garza & Diego Jorrat & Antonio M. Espín & Angel Sánchez, 2023. "Paid and hypothetical time preferences are the same: lab, field and online evidence," Experimental Economics, Springer;Economic Science Association, vol. 26(2), pages 412-434, April.
    18. J. François Outreville, 2015. "The Relationship Between Relative Risk Aversion And The Level Of Education: A Survey And Implications For The Demand For Life Insurance," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 97-111, February.
    19. Campos-Vazquez, Raymundo M. & Cuilty, Emilio, 2014. "The role of emotions on risk aversion: A Prospect Theory experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 50(C), pages 1-9.
    20. Ola Andersson & Håkan J. Holm & Jean-Robert Tyran & Erik Wengström, 2016. "Deciding for Others Reduces Loss Aversion," Management Science, INFORMS, vol. 62(1), pages 29-36, January.

    More about this item

    Keywords

    Risk attitude; Time preference; Experiment; Education; Sub-Saharan Africa;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

    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:reveho:v:17:y:2019:i:2:d:10.1007_s11150-018-9437-x. 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.