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Risk attitudes, development, and growth: macroeconomic evidence from experiments in 30 countries
[working paper]
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Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract We measure risk attitudes in 30 different countries in a controlled, incentivized experiment (N = 3025). At the macroeconomic level, we find a strong and highly significant negative correlation between the risk tolerance of a country and income per capita. This gives rise to a paradox, seen that ris... view more
We measure risk attitudes in 30 different countries in a controlled, incentivized experiment (N = 3025). At the macroeconomic level, we find a strong and highly significant negative correlation between the risk tolerance of a country and income per capita. This gives rise to a paradox, seen that risk tolerance has been found to be positively associated with personal income within countries. We show that this paradox can be explained by unified growth theory. These results are consistent with the prediction that risk attitudes act as a transmission mechanism for growth by encouraging entrepreneurship. Furthermore, our study shows that risk attitudes vary considerably between countries and that for typical experimental stakes, risk seeking or neutrality is just as frequent as risk aversion. (author's abstract)... view less
Keywords
intercultural comparison; risk behavior; economic growth; international comparison; income; correlation; macroeconomics; experiment; measurement
Classification
Economic Policy
Document language
English
Publication Year
2012
City
Berlin
Page/Pages
40 p.
Series
Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, WZB-Nachwuchsgruppe Risiko und Entwicklung, SP II 2012-401
Handle
https://hdl.handle.net/10419/66905
Status
Published Version; reviewed
Licence
Deposit Licence - No Redistribution, No Modifications