Arbeitspapier

Rainfall shocks and risk aversion: Evidence from Southeast Asia

Empirical studies advocating the temporal variability of risk attitudes suggest that adverse covariate shocks significantly alter risk attitudes over time, but there is no consensus on the direction. In this paper, we investigate whether risk aversion increases or decreases in response to shocks. To do so, we combine individual-level panel data with historical rainfall data for rural Thailand and Vietnam. Our econometric analysis shows that temporal variability in risk attitudes is driven by rainfall shocks. Both severe shortages and excesses appear to increase individuals’ risk aversion. Contrary to expectations, we find that this impact is lower for farmers than for non-farmers. We can explain this result by the heterogeneous composition of non-farmers and by farmers’ ability to mitigate rainfall shocks. Our findings have potentially important implications especially for developing countries in that adverse shocks can increase poor people’s risk aversion and may lead to decisions that perpetuate their lives in poverty.

Sprache
Englisch

Erschienen in
Series: TVSEP Working Paper ; No. WP-006

Klassifikation
Wirtschaft
Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
Climate; Natural Disasters and Their Management; Global Warming
Thema
Rainfall
Risk attitudes
Risk mitigation

Ereignis
Geistige Schöpfung
(wer)
Liebenehm, Sabine
Degener, Nele
Strobl, Eric
Ereignis
Veröffentlichung
(wer)
Leibniz Universität Hannover, Thailand Vietnam Socio Economic Panel (TVSEP)
(wo)
Hannover
(wann)
2018

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Liebenehm, Sabine
  • Degener, Nele
  • Strobl, Eric
  • Leibniz Universität Hannover, Thailand Vietnam Socio Economic Panel (TVSEP)

Entstanden

  • 2018

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