Lifecycle patterns in the socioeconomic gradient of risk preferences

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Who is most likely to change their risk preferences over the lifecourse? Using German nationally representative survey data and methods to separate age from cohort effects, we estimate the lifecycle patterns in the socioeconomic gradient of self-reported risk preferences. Tolerance to risk drops by 0.5 SD across all groups from late adolescence to age 40. From mid to old age, risk tolerance continues to drop for the most disadvantaged, while it stabilizes for all other groups. By age 65, the socioeconomic gradient reaches a maximum of 0.5 SD. Extreme risk aversion among the elderly poor has important policy implications.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SOEPpapers on Multidisciplinary Panel Data Research ; No. 742

Classification and Topics

• Classification: Wirtschaft ; Criteria for Decision-Making under Risk and Uncertainty ; Microeconomic Behavior: Underlying Principles ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement
• Subject: risk preferences ; socioeconomic inequalities ; life-course analysis ; cohort effects ; SOEP

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schurer, Stefanie
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/109133