 THE RELATIONSHIP BETWEEN RELATIVE RISK AVERSION AND THE LEVEL OF EDUCATION: A SURVEY AND IMPLICATIONS FOR THE DEMAND FOR LIFE INSURANCEJ. François Outreville Journal of Economic Surveys, 2015, vol. 29, issue 1, 97-111 Abstract: The expected utility hypothesis has been widely used in the construction of economic models and numerous difficulties are encountered in attempting to take into account preferences toward risk in a real-world setting. More recently, attention has focused on comparative studies in economics and business in an international framework and problems related to the hypothesis of relative risk aversion (RRA). One ambiguous hypothesis is the relationship between the level of RRA and the level of education, which has been found either positive or negative. From a causality point of view, it may be argued that investors with a high level of education are less risk averse, but it may also be argued that less risk-averse individuals choose to pursue a higher level of education. The purpose of this paper is to survey the empirical literature on this subject. It provides evidence that risk aversion is negatively correlated with higher education and human development. The results have important implications for macroeconomic empirical studies and the demand for financial assets and more specifically on the demand for life insurance. Assuming the same degree of RRA for utility-maximizing consumers should be limited to homogeneous samples. Date: 2015 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jecsur:v:29:y:2015:i:1:p:97-111 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Journal of Economic Surveys from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.