Risk attitudes, development, and growth: Macroeconomic evidence from experiments in 30 countries

Ferdinand Vieider (), Thorsten Chmura () and Peter Martinsson

Discussion Papers, WZB Junior Research Group Risk and Development from WZB Berlin Social Science Center

Abstract: We measure risk attitudes in 30 different countries in a controlled, incentivized experiment (N = 3025). At the macroeconomic level, we find a strong and highly significant negative correlation between the risk tolerance of a country and income per capita. This gives rise to a paradox, seen that risk tolerance has been found to be positively associated with personal income within countries. We show that this paradox can be explained by unified growth theory. These results are consistent with the prediction that risk attitudes act as a transmission mechanism for growth by encouraging entrepreneurship. Furthermore, our study shows that risk attitudes vary considerably between countries and that for typical experimental stakes, risk seeking or neutrality is just as frequent as risk aversion.

Keywords: risk attitudes; cultural comparison; economic growth; comparative development (search for similar items in EconPapers)
JEL-codes: D01 D03 D81 E02 O10 O11 O12 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-cbe, nep-ent, nep-evo, nep-exp and nep-upt
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbrad:spii2012401

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