Scared Straight or Scared to Death? The Effect of Risk Beliefs on Risky Behaviors

49 Pages Posted: 20 Jun 2016 Last revised: 24 Jun 2016

Jason Theodore Kerwin

University of Minnesota - Twin Cities - Department of Applied Economics

Date Written: June 23, 2016

Abstract

This paper tests a model in which risk compensation can be "fatalistic": higher risks lead to more risk-taking, rather than less. If exposure cannot be perfectly controlled, fatalism arises when risks become sufficiently high. To test the model I randomize the provision of information about HIV transmission rates in Malawi, and use a novel method to decompose the risk elasticity of sexual risk-taking by people's initial risk beliefs. Matching the model's predictions, this elasticity varies from -2.3 for the lowest initial beliefs to 2.9 for the highest beliefs. Fatalistic people, who have a positive elasticity, comprise 14% of the population.

Keywords: Risk Compensation, Economic Epidemiology, Health Economics, HIV/AIDS, Development Economics

JEL Classification: I12, I15, J10, O12

Suggested Citation

Kerwin, Jason Theodore, Scared Straight or Scared to Death? The Effect of Risk Beliefs on Risky Behaviors (June 23, 2016). Available at SSRN: https://ssrn.com/abstract=2797493

Jason Theodore Kerwin (Contact Author)

University of Minnesota - Twin Cities - Department of Applied Economics ( email )

MN
United States

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