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Hilton Atlanta, 223
Hosted By:
Economic Science Association
Origin and Evolution of Preferences
Paper Session
Saturday, Jan. 5, 2019 10:15 AM - 12:15 PM
- Chair: Ragan Petrie, Texas A&M University
Global Evidence on Economic Preferences
Abstract
This paper studies the global variation in economic preferences. For this purpose, we present the Global Preference Survey (GPS), an experimentally validated survey dataset of time preference, risk preference, positive and negative reciprocity, altruism, and trust from 80,000 individuals in 76 countries. The data reveal substantial heterogeneity in preferences across countries, but even larger within-country heterogeneity. Across individuals, preferences vary with age, gender, and cognitive ability, yet these relationships appear partly country specific. At the country level, the data reveal correlations between preferences and bio-geographic and cultural variables such as agricultural suitability, language structure, and religion. Variation in preferences is also correlated with economic outcomes and behaviors. Within countries and subnational regions, preferences are linked to individual savings decisions, labor market choices, and prosocial behaviors. Across countries, preferences vary with aggregate outcomes ranging from per capita income, to entrepreneurial activities, to the frequency of armed conflicts.The Long Lasting Effects of Political Violence on Risk Preferences
Abstract
Using a random sample of over 9,000 poor Peruvians, we show that those exposed to political violence in utero and during early childhood are significantly less risk averse in adulthood. The effect is very large: being exposed to violence can decrease the coefficients of risk aversion by 0.4SD. Violence prior to conception also affects height and BMI, suggesting that part of the effect is mediated by the mother's health at the time of conception. We find no long-term effect of political violence on risk preferences when experienced during mid-childhood or adulthood. We further test the effect of birth conditions on risk preferences using another longitudinal sample of Peruvian children. Children in the lowest quintile of the weight or height distribution are less risk averse at 8 years of age even controlling for contemporaneous health and cognitive development as well as mother's physical, socio-economic characteristics. The effects are also large (0.15SD-0.24SD). This suggests a link between biology and economic preferences.Are Economic Preferences Shaped by the Family Context? The Impact of Birth Order and Siblings’ Sex Composition on Economic Preferences
Abstract
The formation of economic preferences in childhood and adolescence has long-term consequences for social and economic outcomes later in life. Hence, it is important to understand what shapes economic preferences. Running experiments with 525 teenagers, we examine the effects of both birth order and siblings’ sex composition on economic preferences. We find that both aspects matter. Second born children are typically less patient, less risk averse, and more trusting. However, siblings’ sex composition interacts with these findings, such that the common finding that second born children are more risk taking is only confirmed in case of same-sex siblings, while with mixed-sex siblings gender dominates birth order. For trust, gender differences are larger with mixed-sex siblings than in the single-sex case. Only for patience siblings’ sex composition does not matter.JEL Classifications
- A1 - General Economics