Cultural change, risk-taking behavior and implications for economic development
Mariko Klasing ()
Journal of Development Economics, 2014, vol. 110, issue C, 158-169
This research studies the dynamic interplay between the evolution of risk attitudes and the process of economic development. This is achieved by integrating an endogenous growth model with a cultural transmission mechanism that captures how parents shape the risk attitudes of their children in response to economic incentives. The model predicts that in an economy in which the material benefits associated with risky entrepreneurial activity are high, agents will over time develop more risk tolerant attitudes, which in turn will speed up the rate of economic growth. It is shown that policy interventions aiming at supporting entrepreneurial activity can play an important role for overcoming the forces of risk aversion and promoting long-run economic growth. Furthermore, the paper highlights how by inducing cultural change, such policy interventions may quantitatively have larger effects than what would be predicted by more standard models of endogenous growth.
Keywords: Endogenous growth; Earnings risk; Risk aversion; Cultural transmission (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:110:y:2014:i:c:p:158-169
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
Bibliographic data for series maintained by Catherine Liu ().