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...

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Main Authors:	Jakiela, Pamela, Ozier, Owen
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	EMPLOYMENT RISKS ECONOMIC GROWTH STORM PRODUCTION UTILITY FUNCTIONS ERRORS INCOME INTEREST UTILITY MAXIMIZATION STRATEGIES INFORMATION SERVICES PUBLIC SERVICES EFFECTS INCENTIVES EXPERIMENTAL DATA CAPACITY BUILDING INDIFFERENCE CURVES VARIABLES DAMAGES ASSOCIATIONS WEALTH RISK AVERSE PROBABILITIES EVACUEES TRENDS RISK AVERSE INDIVIDUALS BIASES DEVELOPMENT CHOICE LABOR MARKET DATA DECISION THEORY SAVINGS EXPERIMENTAL ECONOMICS DEVELOPMENT ECONOMICS PROBABILITY ECONOMIC DOWNTURNS ECONOMETRICS EXTERNALITIES EXPECTED RETURN UNEMPLOYED MIGRATION STANDARD ERRORS NATURAL DISASTERS UTILITY THEORY MARKETS FORECASTING ORGANIZATIONS DISASTERS INDICATORS LOTTERY EXPECTED VALUES NEGOTIATIONS LABOR FARMERS LOTTERIES UTILITY FINANCE EFFICIENCY ECONOMIC RESEARCH TECHNOLOGY OPINION POLLS HUMAN CAPITAL RISK NEUTRAL EARTHQUAKE ACCOUNTABILITY ECONOMIC COSTS RISK LOVING VALIDITY VALUE BANK CREDIT NEUTRALITY UTILITY FUNCTION VICTIMS VICTIM EXPECTED VALUE INCENTIVE EFFECTS PROPERTY DECISION MAKING MEASUREMENT COUNTING SURVEYS ECONOMICS INSTRUMENTAL VARIABLES MANAGEMENT GOVERNANCE BUSINESS CYCLES SOCIAL CAPITAL SLUMS TRADE LAND THEORY WARS WAR HURRICANE INVESTMENT EXPECTED UTILITY STATISTICS RISK LAW CIVIL WAR RIOTS RANDOMIZATION RISK AVERSION ENTREPRENEURSHIP LABOUR COLLECTIVE ACTION GOVERNMENTS OUTCOMES POLITICAL PARTICIPATION DEVELOPMENT POLICY
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

id	okr-10986-22862
recordtype	oai_dc
spelling	okr-10986-228622021-04-23T14:04:11Z The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment Jakiela, Pamela Ozier, Owen EMPLOYMENT RISKS ECONOMIC GROWTH STORM PRODUCTION UTILITY FUNCTIONS ERRORS INCOME INTEREST UTILITY MAXIMIZATION STRATEGIES INFORMATION SERVICES PUBLIC SERVICES EFFECTS INCENTIVES EXPERIMENTAL DATA CAPACITY BUILDING INDIFFERENCE CURVES VARIABLES DAMAGES ASSOCIATIONS WEALTH RISK AVERSE PROBABILITIES EVACUEES TRENDS RISK AVERSE INDIVIDUALS BIASES DEVELOPMENT CHOICE LABOR MARKET DATA DECISION THEORY SAVINGS EXPERIMENTAL ECONOMICS DEVELOPMENT ECONOMICS PROBABILITY ECONOMIC DOWNTURNS ECONOMETRICS EXTERNALITIES EXPECTED RETURN UNEMPLOYED MIGRATION STANDARD ERRORS NATURAL DISASTERS UTILITY THEORY MARKETS FORECASTING ORGANIZATIONS DISASTERS INDICATORS LOTTERY EXPECTED VALUES NEGOTIATIONS LABOR FARMERS LOTTERIES UTILITY FINANCE EFFICIENCY ECONOMIC RESEARCH TECHNOLOGY OPINION POLLS HUMAN CAPITAL RISK NEUTRAL EARTHQUAKE ACCOUNTABILITY ECONOMIC COSTS RISK LOVING VALIDITY VALUE BANK CREDIT NEUTRALITY UTILITY FUNCTION VICTIMS VICTIM EXPECTED VALUE INCENTIVE EFFECTS PROPERTY DECISION MAKING MEASUREMENT COUNTING SURVEYS ECONOMICS INSTRUMENTAL VARIABLES MANAGEMENT GOVERNANCE BUSINESS CYCLES SOCIAL CAPITAL SLUMS TRADE LAND THEORY WARS WAR HURRICANE INVESTMENT EXPECTED UTILITY STATISTICS RISK LAW CIVIL WAR RIOTS RANDOMIZATION RISK AVERSION ENTREPRENEURSHIP LABOUR COLLECTIVE ACTION GOVERNMENTS OUTCOMES POLITICAL PARTICIPATION DEVELOPMENT POLICY 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. 2015-11-05T15:57:56Z 2015-11-05T15:57:56Z 2015-10 Working Paper http://documents.worldbank.org/curated/en/2015/10/25155020/impact-violence-individual-risk-preferences-evidence-natural-experiment http://hdl.handle.net/10986/22862 English en_US Policy Research Working Paper;No. 7440 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Africa Kenya
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	EMPLOYMENT RISKS ECONOMIC GROWTH STORM PRODUCTION UTILITY FUNCTIONS ERRORS INCOME INTEREST UTILITY MAXIMIZATION STRATEGIES INFORMATION SERVICES PUBLIC SERVICES EFFECTS INCENTIVES EXPERIMENTAL DATA CAPACITY BUILDING INDIFFERENCE CURVES VARIABLES DAMAGES ASSOCIATIONS WEALTH RISK AVERSE PROBABILITIES EVACUEES TRENDS RISK AVERSE INDIVIDUALS BIASES DEVELOPMENT CHOICE LABOR MARKET DATA DECISION THEORY SAVINGS EXPERIMENTAL ECONOMICS DEVELOPMENT ECONOMICS PROBABILITY ECONOMIC DOWNTURNS ECONOMETRICS EXTERNALITIES EXPECTED RETURN UNEMPLOYED MIGRATION STANDARD ERRORS NATURAL DISASTERS UTILITY THEORY MARKETS FORECASTING ORGANIZATIONS DISASTERS INDICATORS LOTTERY EXPECTED VALUES NEGOTIATIONS LABOR FARMERS LOTTERIES UTILITY FINANCE EFFICIENCY ECONOMIC RESEARCH TECHNOLOGY OPINION POLLS HUMAN CAPITAL RISK NEUTRAL EARTHQUAKE ACCOUNTABILITY ECONOMIC COSTS RISK LOVING VALIDITY VALUE BANK CREDIT NEUTRALITY UTILITY FUNCTION VICTIMS VICTIM EXPECTED VALUE INCENTIVE EFFECTS PROPERTY DECISION MAKING MEASUREMENT COUNTING SURVEYS ECONOMICS INSTRUMENTAL VARIABLES MANAGEMENT GOVERNANCE BUSINESS CYCLES SOCIAL CAPITAL SLUMS TRADE LAND THEORY WARS WAR HURRICANE INVESTMENT EXPECTED UTILITY STATISTICS RISK LAW CIVIL WAR RIOTS RANDOMIZATION RISK AVERSION ENTREPRENEURSHIP LABOUR COLLECTIVE ACTION GOVERNMENTS OUTCOMES POLITICAL PARTICIPATION DEVELOPMENT POLICY
spellingShingle	EMPLOYMENT RISKS ECONOMIC GROWTH STORM PRODUCTION UTILITY FUNCTIONS ERRORS INCOME INTEREST UTILITY MAXIMIZATION STRATEGIES INFORMATION SERVICES PUBLIC SERVICES EFFECTS INCENTIVES EXPERIMENTAL DATA CAPACITY BUILDING INDIFFERENCE CURVES VARIABLES DAMAGES ASSOCIATIONS WEALTH RISK AVERSE PROBABILITIES EVACUEES TRENDS RISK AVERSE INDIVIDUALS BIASES DEVELOPMENT CHOICE LABOR MARKET DATA DECISION THEORY SAVINGS EXPERIMENTAL ECONOMICS DEVELOPMENT ECONOMICS PROBABILITY ECONOMIC DOWNTURNS ECONOMETRICS EXTERNALITIES EXPECTED RETURN UNEMPLOYED MIGRATION STANDARD ERRORS NATURAL DISASTERS UTILITY THEORY MARKETS FORECASTING ORGANIZATIONS DISASTERS INDICATORS LOTTERY EXPECTED VALUES NEGOTIATIONS LABOR FARMERS LOTTERIES UTILITY FINANCE EFFICIENCY ECONOMIC RESEARCH TECHNOLOGY OPINION POLLS HUMAN CAPITAL RISK NEUTRAL EARTHQUAKE ACCOUNTABILITY ECONOMIC COSTS RISK LOVING VALIDITY VALUE BANK CREDIT NEUTRALITY UTILITY FUNCTION VICTIMS VICTIM EXPECTED VALUE INCENTIVE EFFECTS PROPERTY DECISION MAKING MEASUREMENT COUNTING SURVEYS ECONOMICS INSTRUMENTAL VARIABLES MANAGEMENT GOVERNANCE BUSINESS CYCLES SOCIAL CAPITAL SLUMS TRADE LAND THEORY WARS WAR HURRICANE INVESTMENT EXPECTED UTILITY STATISTICS RISK LAW CIVIL WAR RIOTS RANDOMIZATION RISK AVERSION ENTREPRENEURSHIP LABOUR COLLECTIVE ACTION GOVERNMENTS OUTCOMES POLITICAL PARTICIPATION DEVELOPMENT POLICY Jakiela, Pamela Ozier, Owen The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
geographic_facet	Africa Kenya
relation	Policy Research Working Paper;No. 7440
description	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.
format	Working Paper
author	Jakiela, Pamela Ozier, Owen
author_facet	Jakiela, Pamela Ozier, Owen
author_sort	Jakiela, Pamela
title	The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
title_short	The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
title_full	The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
title_fullStr	The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
title_full_unstemmed	The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment
title_sort	impact of violence on individual risk preferences : evidence from a natural experiment
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/10/25155020/impact-violence-individual-risk-preferences-evidence-natural-experiment http://hdl.handle.net/10986/22862
_version_	1764452260392206336

The Impact of Violence on Individual Risk Preferences : Evidence from a Natural Experiment

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