Risk Preferences in the PSID: Individual Imputations and Family Covariation / Miles S. Kimball, Claudia R. Sahm, Matthew D. Shapiro.

Format:

Book

Author/Creator:

Kimball, Miles S.

Contributor:

National Bureau of Economic Research.

Sahm, Claudia R.

Shapiro, Matthew D.

Series:

Working Paper Series (National Bureau of Economic Research) no. w14754.

NBER working paper series no. w14754

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Risk Preferences in the PSID

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

Survey measures of preference parameters provide a means for accounting for otherwise unobserved heterogeneity.This paper presents measures of relative risk tolerance based on responses to survey questions about hypothetical gambles over lifetime income.It discusses how to impute estimates of utility function parameters from the survey responses using a statistical model that accounts for survey response error. There is substantial heterogeneity in true preference parameters even after survey response error is taken into account.The paper discusses how to use the preference parameters imputed from the survey responses in regression models as a control for differences in preferences across individuals. This paper focuses on imputations for respondents in the Panel Study of Income Dynamics (PSID).It also studies the covariation of risk preferences among members of households.It finds fairly strong covariation in attitudes about risk -- between parents and children and especially between siblings and between spouses.

Notes:

Print version record

February 2009.