Attitudes Toward Risk: Experimental Measurement in Rural India

Attitudes toward risk were measured in 240 households using two methods: an interview method eliciting certainty equivalents and an experimental gambling approach with real payoffs which, at their maximum, exceeded monthly incomes of unskilled laborers. The interview method is subject to interviewer...

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Bibliographic Details
Published in:American journal of agricultural economics 1980-08, Vol.62 (3), p.395-407
Main Author: Binswanger, Hans P.
Format: Article
Language:English
Subjects:
Age
Agriculture
ATTITUDES
CULTURAL MODIFICATION
ECONOMIC SYSTEM IN DEVELOPING COUNTRIES
Games
INDIA
MODERNIZATION
Personality traits
POLITICAL BEHAVIOR
Psychological attitudes
psychological experiments
Risk aversion
Risk aversion preference
semi-arid tropics
Statistical significance
Subsistence farming
TECHNOLOGICAL DEVELOPMENT
Utility functions
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Summary:Attitudes toward risk were measured in 240 households using two methods: an interview method eliciting certainty equivalents and an experimental gambling approach with real payoffs which, at their maximum, exceeded monthly incomes of unskilled laborers. The interview method is subject to interviewer bias and its results were totally inconsistent with the experimental measures of risk aversion. Experimental measures indicate that, at high payoff levels, virtually all individuals are moderately risk-averse with little variation according to personal characteristics. Wealth tends to reduce risk aversion slightly, but its effect is not statistically significant.
ISSN:0002-9092
1467-8276
DOI:10.2307/1240194