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Can we measure Individual Risk Attitudes in a Survey?

Author

Listed:
  • Xiaohao Ding

    (Peking University)

  • Joop Hartog

    (University of Amsterdam)

  • Yuze Sun

    (Peking University)

Abstract

We combine a survey and an experiment with real pay-out among Peking University students to measure and validate individual risk attitudes. The experiment involves choosing between a cash payment and playing a lottery. The survey questions ask for the reservation price of a hypothetical lottery and self-assessment of risk attitude on a 0-10 scale. We confirm familiar findings: risk aversion dominates, women are more risk averse than men, risk aversion decreases with increasing parental income, risk attitudes are domain-specific. Correlations between survey measures and experimental measures, are in the right direction, but not very high. The survey measures are valid indicators of experimentally measured risk attitude, but with substantial noise remaining. Heterogeneity in levels and structure of risk attitude is large.

Suggested Citation

  • Xiaohao Ding & Joop Hartog & Yuze Sun, 2010. "Can we measure Individual Risk Attitudes in a Survey?," Tinbergen Institute Discussion Papers 10-027/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20100027
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    References listed on IDEAS

    as
    1. Hans P. Binswanger, 1980. "Attitudes Toward Risk: Experimental Measurement in Rural India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(3), pages 395-407.
    2. Brunello, Giorgio, 2002. "Absolute risk aversion and the returns to education," Economics of Education Review, Elsevier, vol. 21(6), pages 635-640, December.
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    More about this item

    Keywords

    risk attitude; survey question; experimental validation;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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