Working Paper: CEPR ID: DP7999
Authors: Dmytro Hryshko; Mara José Luengoprado; Bent E. Sorensen
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
JEL Codes: E21; I29
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental risk aversion (D15) | Children's risk aversion (D15) |
| Compulsory schooling laws (I21) | Parental education (I24) |
| Parental education (I24) | Children's risk aversion (D15) |
| Compulsory schooling laws (I21) | Children's risk aversion (D15) |
| High school graduation rates (I21) | Children's risk aversion (D15) |