Wildfires in Poland: The impact of risk preferences and loss aversion on environmental choices

Anna Bartczak, Susan Chilton and Jürgen Meyerhoff

Ecological Economics, 2015, vol. 116, issue C, 300-309

Abstract: This paper examines how risk preferences and loss aversion affect individual choices regarding environmental risks, specifically forest wildfires in Poland. We also examine how the same individuals make choices in the context of financial risks. Estimating risk, loss aversion and weighting probability parameters allows us to directly test whether Prospect Theory or Expected Utility Theory is the better underlying behavioural model in both domains. We find that in a sample consisting of a general population of Poles, the majority of respondents demonstrate behaviour consistent with Prospect Theory in both environmental and financial domains. This finding has significant implications for future non-market valuation studies. Additionally, in this study, we find evidence for similar risk preferences across those two domains.

Keywords: Risk preferences over financial and environmental domains; Forest fires; Loss aversion; Probability weighting; Prospect Theory (search for similar items in EconPapers)
JEL-codes: D03 D81 Q51 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Working Paper: Wildfires in Poland: the impact of risk preferences and loss aversion on environmental choices (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:116:y:2015:i:c:p:300-309

DOI: 10.1016/j.ecolecon.2015.05.006

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