Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/193195 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11901
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We estimate whether risk preferences are affected by traumatic events by using a unique survey of Sri Lankan twins which contains information on individual's exposure to the 2004 Indian Ocean Tsunami, participation as a combatant in the civil war, validated measures of mental health and risk preferences, and a rich set of control variables. Our estimation strategy utilises variation in experiences within twin pairs and allows us to explore whether preference changes are driven by wealth shocks and/or changes in mental health. We find that both events lead to less risk aversion, a result that is not driven by mental health or wealth changes.
Subjects: 
civil war
natural disaster
risk preferences
twin study
JEL: 
D74
D81
D91
Q54
Document Type: 
Working Paper

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