Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey

Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey

September 2005 | Thomas Dohmen, Armin Falk, David Huffman, Uwe Sunde, Jürgen Schupp, Gert G. Wagner
This paper presents new evidence on the distribution and determinants of individual risk attitudes using a large, representative sample of 22,000 individuals from Germany. The study uses a novel set of survey questions, including an 11-point scale for general risk willingness and a standard lottery question. The results show that willingness to take risks is negatively related to age and gender (females are less willing than males), and positively related to height and parental education. A complementary field experiment with 450 subjects validates the survey measures, demonstrating that the general risk question is a good predictor of actual risk-taking behavior. The paper also examines the impact of context on risk attitudes, finding a strong but imperfect correlation across contexts. The general risk question outperforms the standard lottery measure in predicting various risky behaviors, suggesting that context-specific risk perceptions are important for understanding risky behavior. The findings highlight the importance of individual differences in risk perception and the need to consider these factors in economic models.This paper presents new evidence on the distribution and determinants of individual risk attitudes using a large, representative sample of 22,000 individuals from Germany. The study uses a novel set of survey questions, including an 11-point scale for general risk willingness and a standard lottery question. The results show that willingness to take risks is negatively related to age and gender (females are less willing than males), and positively related to height and parental education. A complementary field experiment with 450 subjects validates the survey measures, demonstrating that the general risk question is a good predictor of actual risk-taking behavior. The paper also examines the impact of context on risk attitudes, finding a strong but imperfect correlation across contexts. The general risk question outperforms the standard lottery measure in predicting various risky behaviors, suggesting that context-specific risk perceptions are important for understanding risky behavior. The findings highlight the importance of individual differences in risk perception and the need to consider these factors in economic models.
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