The Assessment of Risk Behavior: A Cross-Cultural Analysis Using the DOSPERT Scale

Abstract

Using modified versions of the Domain-Specific Risk-Taking (DOSPERT) scale, we conduct surveys among German and Chinese university students. Our tests confirm previous findings that risk taking is indeed domain-specific. More importantly, our results show that differences in risk behavior are attributable more to perceived risk than to expected benefits in the under-lying risk-return framework. Risk behavior is almost entirely predictable by differences in the attitude towards perceived risk, but less so by differences in the subjective evaluation of ex-pected benefits. Additionally, our study measures risk attitude through two distinct method-ologies: on an individual-subject level and on a group-level. We find that the individual-subject risk attitude can lead to inadequate conclusions. Furthermore, our research highlights the relevance of national culture as an important factor for explaining risk-taking propensity. After assessing the group-level risk attitude, a country dummy has considerable explanatory power for risk behavior. This result adds to the emerging literature that focuses on cultural differences for an understanding of risk perceptions and economic behavior in general. Our findings yield substantial support for the “cushion hypothesis” and highlight the usefulness of the cultural dimension of individualism versus collectivism in order to explain risk behavior.

Keywords: risk behavior; risk attitude; risk perception; domain specificity; psychometric scale; culture

JEL Classification: A13, Z10