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Do the Wealthy Risk More Money? An Experimental Comparison

In: Institutions, Equilibria and Efficiency

Author

Listed:
  • Antoni Bosch-Domènech

    (Universitat Pompeu Fabra)

  • Joaquim Silvestre

    (University of California)

Abstract

Summary Are poor people more or less likely to take money risks than wealthy folks? We find that risk attraction is more prevalent among the wealthy when the amounts of money at risk are small (not surprising, since ten dollars is a smaller amount for a wealthy person than for a poor one), but, interestingly, for the larger amounts of money at risk the fraction of the nonwealthy displaying risk attraction actually exceeds that of the wealthy. We also replicate our previous finding that many people display risk attraction for small money amounts, but risk aversion for large ones.

Suggested Citation

  • Antoni Bosch-Domènech & Joaquim Silvestre, 2006. "Do the Wealthy Risk More Money? An Experimental Comparison," Studies in Economic Theory, in: Christian Schultz & Karl Vind (ed.), Institutions, Equilibria and Efficiency, chapter 6, pages 95-116, Springer.
    • Handle: RePEc:spr:steccp:978-3-540-28161-0_6
    DOI: 10.1007/3-540-28161-4_6
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    Citations

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    Cited by:

    1. Bosch-Domènech, Antoni & Silvestre, Joaquim, 2010. "Averting risk in the face of large losses: Bernoulli vs. Tversky and Kahneman," Economics Letters, Elsevier, vol. 107(2), pages 180-182, May.
    2. Calvin Mudzingiri & Sevias Guvuriro & Charity Gomo, 2021. "Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data," JRFM, MDPI, vol. 14(6), pages 1-13, May.
    3. Cardenas, Juan Camilo & Carpenter, Jeffrey P., 2010. "Risk Attitudes and Well-Being in Latin America," IZA Discussion Papers 5279, Institute of Labor Economics (IZA).
    4. Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2020. "The effects of conflict budget on the intensity of conflict: an experimental investigation," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 240-258, March.
    5. Cardenas, Juan Camilo & Carpenter, Jeffrey, 2013. "Risk attitudes and economic well-being in Latin America," Journal of Development Economics, Elsevier, vol. 103(C), pages 52-61.
    6. Basu, Arnab K. & Dimova, Ralitza, 2020. "Household Behavioral Preferences and the Child Labor-Education Trade-off: Framed Field Experimental Evidence from Ethiopia," IZA Discussion Papers 13011, Institute of Labor Economics (IZA).
    7. Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2014. "Resources for Conflict: Constraint or Wealth?," University of East Anglia Applied and Financial Economics Working Paper Series 061, School of Economics, University of East Anglia, Norwich, UK..
    8. Haile, Kaleab K. & Nillesen, Eleonora & Tirivayi, Nyasha, 2020. "Impact of formal climate risk transfer mechanisms on risk-aversion: Empirical evidence from rural Ethiopia," World Development, Elsevier, vol. 130(C).
    9. de Almeida, Filipa & Scott, Ian J. & Soro, Jerônimo C. & Fernandes, Daniel & Amaral, André R. & Catarino, Mafalda L. & Arêde, André & Ferreira, Mário B., 2024. "Financial scarcity and cognitive performance: A meta-analysis," Journal of Economic Psychology, Elsevier, vol. 101(C).
    10. Aniseh S. Bro, 2020. "Climate Change Adaptation, Food Security, and Attitudes toward Risk among Smallholder Coffee Farmers in Nicaragua," Sustainability, MDPI, vol. 12(17), pages 1-17, August.
    11. Zuleta Hernando, 2008. "Poor People and Risky Business," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 14(1), pages 97-112, April.

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