The development of risk aversion and prudence in Chinese children and adolescents

Timo Heinrich () and Jason Shachat
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Timo Heinrich: Hamburg University of Technology

Journal of Risk and Uncertainty, 2020, vol. 61, issue 3, No 4, 263-287

Abstract: Abstract This study experimentally evaluates the risk preferences of children and adolescents living in an urban Chinese environment. We use a simple binary choice task that tests risk aversion, as well as prudence. This is the first test for prudence in children and adolescents. Our results reveal that subjects from grades 5 to 11 (10 to 17 years) make mostly risk-averse and prudent choices. The choices of 3rd graders (8 to 9 years) do not differ statistically from risk neutral benchmarks, but at the same time they make mostly prudent choices. We also find evidence for a transmission of risk preferences. There is positive correlation between all children’s and their parents’ tendency to make risk-averse choices. There is also positive correlation between girls’ and their parents’ tendency to make prudent choices.

Keywords: Risk aversion; Prudence; Transmission of preferences; Age effects; Experimental economics; Children (search for similar items in EconPapers)
JEL-codes: C93 D81 J13 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (9)

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Working Paper: The development of risk aversion and prudence in Chinese children and adolescents (2018)
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DOI: 10.1007/s11166-020-09340-7

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