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Household's risk attitudes in Indonesian villages

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Abstract:

This paper estimates attitudes towards risk using data obtained through interviews of 400 households in villages in Indonesia. Participants were invited to play investment games in order to identify household risk attitudes. The game result supports the hypothesis of non-decreasing partial relative risk aversion. Using an ordered probit model, the determinants of risk attitude were investigated. The results show that the variable of co-residence is important: an individual living with his or her parents is less risk averse than an individual in a nuclear household. Co-residence can be viewed as a type of 'security blanket'. Partial relative risk aversion decreases with the level of education and wealth.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/0003684022000020823

Affiliations: Course of International Studies, Institute of Environmental Studies, Graduate School of Frontier Sciences, University of Tokyo, 7-3-1Hongo, Bunkyo-ku, Tokyo, 113-0033, Japan. E-mail address: kmiyata@mail.ecc.u-tokyo.ac.jp

Publication date: March 1, 2003

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