Attitudes towards large income risk in welfare states: an international comparison

Fred Schroyen () and Karl Ove Aarbu ()
Additional contact information
Fred Schroyen: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH , Department of Economics, Helleveien 30, N-5045 Bergen, Norway, https://www.nhh.no/en/employees/faculty/fred-schroyen/
Karl Ove Aarbu: Tryg Forsikring, Postal: Tryg Forsikring, Folke Bernadottes vei 50, 5020 Bergen, Norway

No 20/2017, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: Using survey data and the instrument developed by Barsky et al.(1997), we estimate the distribution of attitudes towards income risk in a country where many employment and health-related risks are generously covered by a tax …financed social insurance system (Norway 2006) . Under a CRRA assumption, the sample average for the coefficient of relative risk aversion is 3.8 with a standard deviation of 2.3. This number is then contrasted to that for five other OECD countries where risk attitudes have been measured using the same instrument and also prior to the financial crisis: Chile, France, Italy, The Netherlands and the US. When we relate this distribution for stated relative risk aversion to that for generosity of social insurance and the risks related to employment and Health expenditure, a picture emerges suggesting that more extensive welfare states induce higher risk tolerance for foreground risks-–a- relationship that is in line with the theory on risk vulnerability.

Keywords: Risk aversion; stated preferences; income lotteries; background risk; risk vulnerability; welfare state. (search for similar items in EconPapers)
JEL-codes: D12 D81 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2017-12-05
New Economics Papers: this item is included in nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://brage.bibsys.no/xmlui/bitstream/handle/112 ... quence=1&isAllowed=y (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to brage.bibsys.no:443 (nodename nor servname provided, or not known)

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:hhs:nhheco:2017_020

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway. Contact information at EDIRC.
Bibliographic data for series maintained by Synne Stormoen ().