Risk preferences and the decision to flee conflict

Lidia Ceriani () and Paolo Verme

No 460, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: Despite the growing numbers of forcibly displaced persons worldwide, many people living under conflict choose not to flee. Individuals face two lotteries - staying or leaving- characterized by two distributions of potential outcomes. This paper proposes to model the choice between these two lotteries using quantile maximization as opposed to expected utility theory. We posit that risk-averse individuals aim at minimizing losses by choosing the lottery with the best outcome at the lower end of the distribution, whereas risk-tolerant individuals aim at maximizing gains by choosing the lottery with the best outcome at the higher end of the distribution. Using a rich set of household and conflict panel data from Nigeria, we find risk-tolerant individuals to have a significant preference for staying and risk-averse individuals to have a significant preference for fleeing in line with the predictions of the quantile maximization model. This is contrary to findings on economic migrants and calls for separate policies towards economic and forced migrants.

Keywords: Conflict; migration; expected utility; forced displacement; quantile maximization. (search for similar items in EconPapers)
JEL-codes: D01 D1 D3 D6 D7 D8 I3 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018-03
New Economics Papers: this item is included in nep-cbe, nep-mig and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: Risk preferences and the decision to flee conflict (2018)
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