Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/263750 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9820
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We measure individual-level loss aversion using three incentivized, representative surveys of the U.S. population (combined N = 3,000). We find that around 50% of the U.S. population is loss tolerant, with many participants accepting negative-expected-value gambles. This is counter to earlier findings−which mostly come from lab/student samples−and expert predictions that 70-90% of participants are loss averse. Consistent with the difference between our study and the prior literature, loss aversion is more prevalent in people with high cognitive ability. Loss-tolerant individuals are more likely to report recent gambling and to have experienced financial shocks. These results support the general hypothesis that individuals value gains and losses differently, although the tendency in a large proportion of the population to emphasize gains over losses is an overlooked behavioral phenomenon.
Subjects: 
loss aversion
DOSE
risk preferences
cognitive ability
negative shocks
gambling
JEL: 
C81
C90
D03
D81
D90
Document Type: 
Working Paper
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