Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/262021 
Year of Publication: 
2021
Series/Report no.: 
Centre for Land Tenure Studies Working Paper No. 05/21
Publisher: 
Norwegian University of Life Sciences (NMBU), Centre for Land Tenure Studies (CLTS), Ås
Abstract: 
While economists in the past tended to assume that individual preferences, including risk preferences, are stable over time, a recent literature has developed that indicates that risk preferences respond to shocks. This paper combines survey data and field experiments with three different tools that facilitated elicitation of dis-aggregated measures of risk preferences, including utility curvature, probability weighting and loss aversion. By treating the recent shocks as natural experiments, the study assessed the sensitivity of each of these risk preference measures to the recent idiosyncratic and covariate (drought) shocks among a sample of resource-poor young adults living in a semi-arid rural environment in Sub-Saharan Africa. The results show that the dis-aggregated risk preference measures revealed substantial shock effects that were undetected when relying on a tool that elicited only one single measure of risk tolerance. Both the timing and covariate nature of the shocks affected the dis-aggregated measures of risk preferences differently, pointing towards the need for further studies of this kind in different contexts.
Subjects: 
Covariate shocks
Idiosyncratic shocks
Stability of riskpreference parameters
Field experiment
Ethiopia
JEL: 
C93
D81
ISBN: 
978-82-7490-296-1
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.