The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
This study estimates the impact of Kenya’s post-election violence on individual risk preferences. Because the crisis interrupted a longitudinal survey of more than five thousand Kenyan youth, this timing creates plausibly exogenous variation in exp...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/10/25155020/impact-violence-individual-risk-preferences-evidence-natural-experiment http://hdl.handle.net/10986/22862 |
| Summary: | This study estimates the impact of
Kenya’s post-election violence on individual risk
preferences. Because the crisis interrupted a longitudinal
survey of more than five thousand Kenyan youth, this timing
creates plausibly exogenous variation in exposure to civil
conflict by the time of the survey. The study measures
individual risk preferences using hypothetical lottery
choice questions, which are validated by showing that they
predict migration and entrepreneurship in the cross-section.
The results indicate that the post-election violence sharply
increased individual risk aversion. Immediately after the
crisis, the fraction of subjects who are classified as
either risk neutral or risk loving dropped by roughly 26
percent. The findings remain robust to an IV estimation
strategy that exploits random assignment of respondents to
waves of surveying. |
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