 Risk attitudes and economic well-being in Latin AmericaJuan-Camilo Cardenas and Jeffrey Carpenter Journal of Development Economics, 2013, vol. 103, issue C, 52-61 Abstract: A common conjecture in both the theoretical and policy literatures on development is that people remain poor because they are too impatient and risk averse to accumulate the resources needed to improve their well-being. The empirical literature, however, suggests that this conjecture is far from proven. We sample more than 3000 participants drawn representatively from six Latin American cities and find little correlation between baseline risk aversion and well-being, measured as an index of eight outcomes. We do, however, find that measures of ambiguity aversion, loss aversion and the willingness to take advantage of a risk pooling scheme all correlate with well-being. Participants who are ambiguity averse, loss averse, and who react conservatively in the risk pooling condition all have significantly lower scores on our well-being index. These results are robust to the inclusion of a variety of important controls like human capital accumulation and access to credit. Keywords: Risk aversion; Ambiguity aversion; Loss aversion; Risk pooling; Economic status; Latin America (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:103:y:2013:i:c:p:52-61 DOI: 10.1016/j.jdeveco.2013.01.008 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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