Arbeitspapier
Risk Aversion and the Subjective Time Discount Rate: A Joint Approach
In this paper we analyze a large sample of individual responses to six lottery questions. Wederive a simultaneous estimate of risk aversion ? and the time preference discount rate ? perindividual. This can be done because the consumption of a large prize is smoothed over a largertime period. It is found that ? and ? strongly vary over individuals, while they are negativelycorrelated with a correlation coefficient of -.3. Furthermore we explain ? and ? by income,age, gender, entrepreneurship and an obesity index. Very significant effects are found. If weexplain ? in a simple model where time discounting is ignored, we find completely differentestimates for ? . We conclude that in the case of lotteries with big prizes a simultaneous estimateof ? and ? is needed in order to avoid misspecification.
- Sprache
-
Englisch
- Erschienen in
-
Series: Tinbergen Institute Discussion Paper ; No. 03-018/3
- Klassifikation
-
Wirtschaft
Consumer Economics: Empirical Analysis
Information, Knowledge, and Uncertainty: General
Micro-Based Behavioral Economics: General‡
Macroeconomics: Consumption; Saving; Wealth
- Thema
-
Expected Utility
Risk Aversion
Time Preference
Lotteries
Hypothetical Questions.
Glücksspiel
Erwartungsnutzen
Risikoaversion
Zeitpräferenz
Test
Theorie
Niederlande
- Ereignis
-
Geistige Schöpfung
- (wer)
-
van Praag, Bernard M.S.
Booij, Adam S.
- Ereignis
-
Veröffentlichung
- (wer)
-
Tinbergen Institute
- (wo)
-
Amsterdam and Rotterdam
- (wann)
-
2003
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- van Praag, Bernard M.S.
- Booij, Adam S.
- Tinbergen Institute
Entstanden
- 2003
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