Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education

49 Pages Posted: 14 Nov 2010

See all articles by Dmytro Hryshko

Dmytro Hryshko

University of Alberta

Maria Jose Luengo-Prado

Indus Center for Academic Excellence

Bent E. Sørensen

University of Houston - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: September 2010

Abstract

We study the determinants of individual attitudes towards risk and, in particular, why some individuals exhibit extremely high risk aversion. Using data from the Panel Study of Income Dynamics we find that a policy induced increase in high school graduation rates leads to significantly fewer individuals being highly risk averse in the next generation. Other significant determinants of risk aversion are age, sex, and parents' risk aversion. We verify that risk aversion matters for economic behavior in that it predicts individuals' volatility of income.

Keywords: high school movement, intergenerational transmission

JEL Classification: E21, I29

Suggested Citation

Hryshko, Dmytro and Luengo-Prado, Maria Jose and Sorensen, Bent E., Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education (September 2010). CEPR Discussion Paper No. DP7999, Available at SSRN: https://ssrn.com/abstract=1707889

Dmytro Hryshko (Contact Author)

University of Alberta ( email )

Edmonton, Alberta T6G 2R3
Canada

Maria Jose Luengo-Prado

Indus Center for Academic Excellence ( email )

Bent E. Sorensen

University of Houston - Department of Economics ( email )

204 McElhinney Hall
Houston, TX 77204-5882
United States
713-743-3841 (Phone)
713-743-3798 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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