Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/141629 
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers No. 9870
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We estimate the impact of Kenya's post-election crisis on individual risk preferences. The crisis interrupted a longitudinal survey of more than five thousand Kenyan youth, creating plausibly exogenous variation in exposure to civil conflict by the time of the survey. We measure individual risk preferences using hypothetical lottery choice questions which we validate by showing that they predict migration and entrepreneurship in the cross-section. Our results indicate that the post-election violence sharply increased individual risk aversion. Immediately after the crisis, the fraction of subjects displaying extreme risk aversion increased by more than 80 percent. Findings remain robust when we use an IV estimation strategy that exploits random assignment of respondents to waves of surveying. Our results suggest that the crisis also impacted trust, social capital, and beliefs about the economy, though it did not have any detectable negative impacts on job prospects or wages.
Subjects: 
risk preferences
civil conflict
natural experiment
JEL: 
C91
C93
D01
D74
D81
Document Type: 
Working Paper

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