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To what extent does income predict an individual’s risk profile in the UK (2012- 2014)

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  • Wright, Joshua

Abstract

This study seeks to estimate whether income is predictive of an individual’s risk profile. The consensus amongst the existing literature is that income is predictive of an individual’s risk profile and the two do have a relationship. This study uses a quantitative approach by estimating a series of statistical models that estimate the relationship between an individual’s income and their risk profile using a large UK based longitudinal dataset. The research finds that income is positively related to risk and that for every £1,000 increase in income, an individual’s odds of becoming risk seeking increase by 1%. Moreover, the research finds that not only is income predictive of an individual’s risk, but so too are;; gender, education level, age and self-employment.

Suggested Citation

  • Wright, Joshua, 2017. "To what extent does income predict an individual’s risk profile in the UK (2012- 2014)," MPRA Paper 80757, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80757
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    References listed on IDEAS

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    Cited by:

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    2. Chew, Soo Hong & Huang, Wei & Li, Xun, 2021. "Does haze cloud decision making? A natural laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 182(C), pages 132-161.
    3. Sezen O. Onal, 2024. "Heterogeneity in crowd‐out by risk aversion: Assessing the effect of the ACA Medicaid expansion," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 27(2), pages 137-160, June.

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    More about this item

    Keywords

    Individuals; Risk Profiles; Income; UK.;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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