Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample

Jonathan Chapman, Erik Snowberg, Stephanie Wang and Colin Camerer ()

No 9820, CESifo Working Paper Series from CESifo

Abstract: We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N = 3,000). We find that around 50% of the U.S. population is loss tolerant, with many participants accepting negative-expected-value gambles. This is counter to earlier findings−which mostly come from lab/student samples−and expert predictions that 70-90% of participants are loss averse. Consistent with the difference between our study and the prior literature, loss aversion is more prevalent in people with high cognitive ability. Loss-tolerant individuals are more likely to report recent gambling and to have experienced financial shocks. These results support the general hypothesis that individuals value gains and losses differently, although the tendency in a large proportion of the population to emphasize gains over losses is an overlooked behavioral phenomenon.

Keywords: loss aversion; DOSE; risk preferences; cognitive ability; negative shocks; gambling (search for similar items in EconPapers)
JEL-codes: C81 C90 D03 D81 D90 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-neu and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Looming Large or Seeming Small? Attitudes Towards Losses in a Representative Sample (2022)
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