Attitudes Towards Income Risk in the Presence of Quantity Constraints&ast

Fred Schroyen ()
Additional contact information
Fred Schroyen: Department of Economics, Norwegian School of Economics, Helleveien 30, Bergen N-5045, Norway.

The Geneva Risk and Insurance Review, 2013, vol. 38, issue 2, 183-209

Abstract: Considering a consumer with standard preferences, I trace out how quantity constraints on markets impact on relative risk aversion and prudence. I first show how this impact decomposes into a local curvature effect and an endogenously changing risk aversion/prudence effect. Next, I calibrate both effects on relative risk aversion and prudence, using estimates on household demand for durables and labour supply. The calibrations show that commitments to durable goods have large effects on attitudes towards risk. And while small wedges between realised and desired levels of labour supply have only moderate effects, becoming full time unemployed on a 60 per cent unemployment benefit significantly raises risk aversion and prudence.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.palgrave-journals.com/grir/journal/v38/n2/pdf/grir20133a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/grir/journal/v38/n2/full/grir20133a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:genrir:v:38:y:2013:i:2:p:183-209

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10713

Access Statistics for this article

The Geneva Risk and Insurance Review is currently edited by Michael Hoy and Nicolas Treich

More articles in The Geneva Risk and Insurance Review from Palgrave Macmillan, International Association for the Study of Insurance Economics (The Geneva Association) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().