On the measurement of risk aversion from experimental data

Authors: Wik, Mette; Aragie Kebede, Tewodros; Bergland, Olvar; Holden, Stein T.

Source: Applied Economics, Volume 36, Number 21, December 10, 2004 , pp. 2443-2451(9)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

Attitudes towards risk are measured for households in Northern Zambia using an experimental gambling approach with real payoffs that at maximum were equal to 30% of average total annual income per capita. The results of the experiment show decreasing absolute risk aversion and increasing partial risk aversion. Determinants of risk aversion are investigated using random effects interval regression model exploiting the panel data structure of the repeated experiments. Wealth indicator variables are found to be significant, and partial relative risk aversion decreases as wealth increases. Females are found to be more risk averse than males.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/0003684042000280580

Publication date: December 1, 2004

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