Risk Attitude, Impatience, and Asset Choice

Angelika Eymann (), Axel Börsch-Supan () and Rob Euwals
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Angelika Eymann: Sonderforschungsbereich 504, Postal: L 13, 15, D-68131 Mannheim
Axel Börsch-Supan: Sonderforschungsbereich 504, Postal: L 13, 15, D-68131 Mannheim
Rob Euwals: IZA Bonn

No 02-28, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: Attitudes with respect to risk bearing, self-control and impatience are potentially important determinants of a households' decision whether or not to hold a certain assets. They are, however, hard to measure. This paper acknowledges the endogeneity of common measures of risk attitudes and impatience. Specifically, this study exploits responses to hypothetical lottery questions and self-assessments to analyze the impact of individual attitudes with respect to risk and time on asset choice. In addition, we investigate the role of borrowing constraints, income uncertainty, human capital, labor supply flexibility, and tax incentives. We use Dutch cross-section microdata and apply simulated maximum likelihood methods to analyze the determinants and interdependence of attitudes and asset choice in a non-linear structural equations model.

Pages: 50 pages
Date: 2002-03-22
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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