Risk preferences and development revisited: A field experiment in Vietnam

Ferdinand Vieider (), Nghi Truong, Peter Martinsson, Pham Khanh Nam and Peter Martinsson
Authors registered in the RePEc Author Service: Peter Martinsson

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

Abstract: We obtain rich measures of risk preferences of poor farmers in Vietnam, and estimate structural models that capture risk preferences over different probability levels and across different domains (gains and losses). The results break radically with the previous literature on risk preferences, in developed and developing countries alike. Far from being particularly risk averse, our Vietnamese farmers are on average risk neutral. At the same time, we find our preference measures to perform well at predicting behavior, from the purchase of lottery tickets to risk management on the farm. We also find strong direct evidence of a risk-income paradox. While risk aversion is strongly decreasing in income within our farmer subject population, our Vietnamese farmers are significantly less risk averse than subjects in Western countries according to measurements obtained using the same decision tasks and procedures.

Keywords: risk preferences; development; external validity (search for similar items in EconPapers)
JEL-codes: C93 D03 D80 O12 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-agr, nep-cbe, nep-exp, nep-sea and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbrad:spii2013403

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