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Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education

Dmytro Hryshko (), Maria Luengo-Prado () and Bent Sorensen

No 7999, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the determinants of individual attitudes towards risk and, in particular, why some individuals exhibit extremely high risk aversion. Using data from the Panel Study of Income Dynamics we find that a policy induced increase in high school graduation rates leads to significantly fewer individuals being highly risk averse in the next generation. Other significant determinants of risk aversion are age, sex, and parents' risk aversion. We verify that risk aversion matters for economic behavior in that it predicts individuals' volatility of income.

Keywords: high school movement; intergenerational transmission (search for similar items in EconPapers)
JEL-codes: E21 I29 (search for similar items in EconPapers)
Date: 2010-09
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Journal Article: Childhood determinants of risk aversion: The long shadow of compulsory education (2011)
Working Paper: Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education (2011) Downloads
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