Risk Preferences in the PSID: Individual Imputations and Family Covariation

Miles Kimball, Claudia R. Sahm and Matthew D. Shapiro

No 14754, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Survey measures of preference parameters provide a means for accounting for otherwise unobserved heterogeneity.This paper presents measures of relative risk tolerance based on responses to survey questions about hypothetical gambles over lifetime income.It discusses how to impute estimates of utility function parameters from the survey responses using a statistical model that accounts for survey response error. There is substantial heterogeneity in true preference parameters even after survey response error is taken into account.The paper discusses how to use the preference parameters imputed from the survey responses in regression models as a control for differences in preferences across individuals. This paper focuses on imputations for respondents in the Panel Study of Income Dynamics (PSID).It also studies the covariation of risk preferences among members of households.It finds fairly strong covariation in attitudes about risk -- between parents and children and especially between siblings and between spouses.

JEL-codes: C42 D12 D81 E21 J12 (search for similar items in EconPapers)
Date: 2009-02
New Economics Papers: this item is included in nep-mac and nep-upt
Note: AP EFG ME
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Citations: View citations in EconPapers (106)

Published as Miles S. Kimball & Claudia R. Sahm & Matthew D. Shapiro, 2009. "Risk Preferences in the PSID: Individual Imputations and Family Covariation," American Economic Review, American Economic Association, vol. 99(2), pages 363-68, May.

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Journal Article: Risk Preferences in the PSID: Individual Imputations and Family Covariation (2009)
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