On the Sources of Risk Preferences in Rural Vietnam
ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics
In this paper, I provide new empirical evidence that the natural environment can shape individual risk preferences. By combining historical data on weather variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, households highly affected by weather volatility show a longterm risk aversion and are more willing to buy insurance to protect crop losses. The finding also supports the hypothesis that when people are used to live in a risky environment, an incremental increase in risk affects their risk preferences less.
JEL-codes: D03 O53 Q54 (search for similar items in EconPapers)
Pages: 57 Pages
New Economics Papers: this item is included in nep-agr, nep-dev, nep-evo, nep-his, nep-ias and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2012-593
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