Can We Measure Individual Risk Attitudes in a Survey?

32 Pages Posted: 15 Mar 2010

See all articles by Xiaohao Ding

Xiaohao Ding

affiliation not provided to SSRN

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Yuze Sun

affiliation not provided to SSRN

Abstract

We combine a survey and an experiment with real pay-out among Peking University students to measure and validate individual risk attitudes. The experiment involves choosing between a cash payment and playing a lottery. The survey questions ask for the reservation price of a hypothetical lottery and self-assessment of risk attitude on a 0-10 scale. We confirm familiar findings: risk aversion dominates, women are more risk averse than men, risk aversion decreases with increasing parental income, risk attitudes are domain-specific. Correlations between survey measures and experimental measures, are in the right direction, but not very high. The survey measures are valid indicators of experimentally measured risk attitude, but with substantial noise remaining. Heterogeneity in levels and structures of risk attitude is large.

Keywords: risk attitude, survey question, experimental validation

JEL Classification: D12

Suggested Citation

Ding, Xiaohao and Hartog, Joop and Sun, Yuze, Can We Measure Individual Risk Attitudes in a Survey?. IZA Discussion Paper No. 4807. Available at SSRN: https://ssrn.com/abstract=1570425

Xiaohao Ding (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Yuze Sun

affiliation not provided to SSRN ( email )

No Address Available

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