Relative deprivation as a cause of risky behaviors

Arbeitspapier

Combining a standard measure of concern about low relative wealth and a standard measure of relative risk aversion leads to a novel explanation of variation in risk-taking behavior identified and documented by social psychologists and economists. We obtain two results: (1) Holding individual i's wealth and his rank in the wealth distribution constant, the individual's relative risk aversion decreases when he becomes more relatively deprived as a result of an increase in the average wealth of the individuals who are wealthier than he is. (2) If relative deprivation enters the individual's utility function approximately linearly then, holding constant individual i's wealth and the average wealth of the individuals who are wealthier than he is, the individual's relative risk aversion decreases when he becomes more relatively deprived as a result of a decline in his rank. Our findings provide a theoretical support for evidence about the propensity of relatively deprived individuals to gamble and resort to other risky behaviors.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: ZEF Discussion Papers on Development Policy ; No. 284

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Microeconomic Behavior: Underlying Principles ; Criteria for Decision-Making under Risk and Uncertainty ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Health Behavior
• Thema: Social preferences ; Relative deprivation ; Concern about low relative wealth ; Risk aversion

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Stark, Oded
• Ereignis: Veröffentlichung
• (wer): University of Bonn, Center for Development Research (ZEF)
• (wo): Bonn
• (wann): 2019

Weitere Informationen

• Handle: http://hdl.handle.net/10419/213460
• Letzte Aktualisierung: 2025-03-10T11:42:33+0100