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Title: Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education

Author(s): Dmytro Hryshko, Maria Jose Luengo-Prado and Bent E Sørensen

Publication Date: September 2010

Keyword(s): high school movement and intergenerational transmission

Programme Area(s): International Macroeconomics

Abstract: We study the determinants of individual attitudes towards risk and, in particular, why some individuals exhibit extremely high risk aversion. Using data from the Panel Study of Income Dynamics we find that a policy induced increase in high school graduation rates leads to significantly fewer individuals being highly risk averse in the next generation. Other significant determinants of risk aversion are age, sex, and parents' risk aversion. We verify that risk aversion matters for economic behavior in that it predicts individuals' volatility of income.

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Bibliographic Reference

Hryshko, D, Luengo-Prado, M and Sørensen, B. 2010. 'Childhood Determinants of Risk Aversion: The Long Shadow of Compulsory Education'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7999