Can Climate Shocks Make Vulnerable Subjects More Willing to Take Risks?

• Published in: Environmental & resource economics Vol. 87; no. 4; pp. 967 - 1007
• Main Authors: Holden, Stein T., Tilahun, Mesfin
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.04.2024; Springer Nature B.V
• Subjects: climate; Curvature; Drought; Economic Policy; Economics; Economics and Finance; Environmental Economics; Environmental Law/Policy/Ecojustice; Environmental Management; Expected utility; Experiments; Multiple choice; Premiums; Probability; Risk; Risk assessment; Risk preferences; Risk taking; rural areas; Rural environments; Semiarid zones; Sub-Saharan Africa; Weighting; Weighting functions; Young adults; Sub-Saharan Africa; Stability of risk preference parameters; Covariate shocks; Idiosyncratic shocks; C93; D81; Field experiment; Ethiopia

While economists in the past tended to assume that individual preferences, including risk preferences, are stable over time, a recent literature has developed and indicates that risk preferences respond to shocks, with mixed evidence on the direction of the responses. This paper utilizes a natural e...