Can Climate Shocks Make Vulnerable Subjects More Willing to Take Risks? (Record no. 134258)

MARC details
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fixed length control field 02412nam a2200205Ia 4500
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022 ## - INTERNATIONAL STANDARD SERIAL NUMBER
International Standard Serial Number 1573-1502
100 ## - MAIN ENTRY--PERSONAL NAME
Personal name Holden, Stein T.
9 (RLIN) 122337
245 #0 - TITLE STATEMENT
Title Can Climate Shocks Make Vulnerable Subjects More Willing to Take Risks?
260 ## - PUBLICATION, DISTRIBUTION, ETC.
Name of publisher, distributor, etc. Environmental and Resource Economics
260 ## - PUBLICATION, DISTRIBUTION, ETC.
Date of publication, distribution, etc. 2024
300 ## - PHYSICAL DESCRIPTION
Extent 967-1007
520 ## - SUMMARY, ETC.
Abstract While economists in the past tended to assume that individual preferences, including risk preferences, are stable over time, a recent literature has developed and indicates that risk preferences respond to shocks, with mixed evidence on the direction of the responses. This paper utilizes a natural experiment with covariate (drought) and idiosyncratic shocks in combination with an independent field risk experiment. The risk experiment uses a Certainty Equivalent-Multiple Choice List approach and is played 1-2 years after the subjects were (to a varying degree) exposed to a covariate drought shock or idiosyncratic shocks for a sample of resource-poor young adults living in a risky semi-arid rural environment in Sub-Saharan Africa. The experimental approach facilitates a comprehensive assessment of shock effects on experimental risk premiums for risky prospects with varying probabilities of good and bad outcomes. The experiment also facilitates the estimation of the utility curvature in an Expected Utility (EU) model and, alternatively, separate estimation of probability weighting and utility curvature in three different Rank Dependent Utility models with a two-parameter Prelec probability weighting function. Our study is the first to comprehensively test the theoretical predictions of Gollier and Pratt (Econom J Econom Soc 64:1109-1123, 1996) versus Quiggin (Econ Theor 22(3):607-611, 2003). Gollier and Pratt (1996) build on EU theory and state that an increase in background risk will make subjects more risk averse while Quiggin (2003) states that an increase in background risk can enhance risk-taking in certain types of non-EU models. We find strong evidence that such non-EU preferences dominate in our sample.
650 ## - SUBJECT ADDED ENTRY--TOPICAL TERM
Topical term or geographic name entry element Covariate Shocks
9 (RLIN) 122338
650 ## - SUBJECT ADDED ENTRY--TOPICAL TERM
Topical term or geographic name entry element Idiosyncratic Shocks
9 (RLIN) 122339
650 ## - SUBJECT ADDED ENTRY--TOPICAL TERM
Topical term or geographic name entry element Stability of Risk Preference Parameters
9 (RLIN) 122340
650 ## - SUBJECT ADDED ENTRY--TOPICAL TERM
Topical term or geographic name entry element Field Experiment
9 (RLIN) 122341
700 ## - ADDED ENTRY--PERSONAL NAME
Personal name Tilahun, Mesfin
9 (RLIN) 122342
856 ## - ELECTRONIC LOCATION AND ACCESS
Uniform Resource Identifier <a href="https://doi.org/10.1007/s10640-024-00850-5">https://doi.org/10.1007/s10640-024-00850-5</a>
999 ## - SYSTEM CONTROL NUMBERS (KOHA)
Koha biblionumber 134258
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        Dr VKRV Rao Library Dr VKRV Rao Library 08/10/2024 Vol. 87, No. 4   AI542 08/10/2024 08/10/2024 Article Index