Health shocks and risk aversion: Panel and experimental evidence from Vietnam

Jan Priebe, Ute Rink and Henry Stemmler
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Jan Priebe: German Institute of Global and Area Studies (GIGA), Hamburg, Germany
Ute Rink: University of Goettingen
Henry Stemmler: University of Goettingen

No 267, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: This paper looks at individual risk behavior and disability in Vietnam, where many households live with a disabled family member. Due to the Vietnam war, disability is a common phenomenon and shapes individuals’ daily life and decision making. Using longitudinal data of 2200 households in Vietnam and an instrumental variable strategy, we show that individuals who live with a disabled family member are more risk averse than others. In addition we employ field experiments and psychological primes to elicit risk and loss behavior of individuals living in the Vietnam province Ha-Thinh. The experimental results, underpin our panel results. We show in addition that a negative recollection of health issues, leads to a lower risk attitude of individuals who do not live with a disabled family member and that individuals who live with a disabled family member are less loss averse. Our findings are causal and contribute to existing studies showing that households who are characterized by higher backward risks are more risk averse than others.

Keywords: risk; disability; Vietnam (search for similar items in EconPapers)
JEL-codes: D1 I14 Z1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-hea, nep-sea and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:got:gotcrc:267

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