Risk Preferences Under Heterogeneous Environmental Risk

46 Pages Posted: 3 Aug 2011 Last revised: 28 Jan 2014

See all articles by Roland Olbrich

Roland Olbrich

Leuphana University of Lueneburg - Dept. of Economics

Martin F. Quaas

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig

Andreas Haensler

Max Planck Institute for Meteorology

Stefan Baumgärtner

University of Freiburg - Department of Environment and Natural Resources

Date Written: May 15, 2012

Abstract

We study risk preferences and their determinants for commercial cattle farmers in Namibia who are subject to high precipitation risk that is heterogeneous across farms. We use data on risk preferences from questionnaire and field experiments, simulated data for on-farm precipitation risk and data on famers’ previous place of residence. We find that, on average, less risk-averse farmers operate farms with higher precipitation risk. Moreover, the longer farmers experience a given precipitation risk in early life the more risk-averse they are. These findings suggest self-selection and malleability of risk preferences, respectively.

Keywords: risk preferences, environmental risk, experimental elicitation, malleability of preferences, self-selection, field experiment

JEL Classification: D81, Q12

Suggested Citation

Olbrich, Roland and Quaas, Martin F. and Haensler, Andreas and Baumgärtner, Stefan, Risk Preferences Under Heterogeneous Environmental Risk (May 15, 2012). Available at SSRN: https://ssrn.com/abstract=1904315 or http://dx.doi.org/10.2139/ssrn.1904315

Roland Olbrich (Contact Author)

Leuphana University of Lueneburg - Dept. of Economics ( email )

Postfach 2440
Lüneburg, 21314
Germany

Martin F. Quaas

German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig ( email )

Deutscher Platz 5e
Leipzig, 04103
Germany

HOME PAGE: http://www.idiv.de/bioecon

Andreas Haensler

Max Planck Institute for Meteorology ( email )

Bundesstr. 53
Hamburg, 20146
Germany

Stefan Baumgärtner

University of Freiburg - Department of Environment and Natural Resources ( email )

Tennebacher Str. 4
Freiburg, 79106
Germany

HOME PAGE: http://www.ere.uni-freiburg.de

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