Linking Measured Risk Aversion to Individual Characteristics

In: Kyklos: international review for social sciences, Band 55, Heft 1, S. 3-26

Abstract

From the stated price of a specified lottery in three unrelated surveys we deduce individuals' Arrow‐Pratt measure of risk aversion. We find that risk aversion indeed falls with income and wealth. Entrepreneurs are less risk averse than employees, civil servants are more risk averse than private sector employees, and women are more risk averse than men. A simple lottery question appears a promising survey instrument to explore risk attitude and its relation to personal characteristics.