Shaking Things Up: On the Stability of Risk and Time Preferences

56 Pages Posted: 7 Apr 2020

See all articles by Michel A. R. Beine

Michel A. R. Beine

University of Luxemburg; CESifo (Center for Economic Studies and Ifo Institute)

Gary Charness

University of California, Santa Barbara (UCSB) - Department of Economics

Arnaud Dupuy

Centre de Recherche en Économie Appliquée (CREA)

Majlinda Joxhe

University of Rome Tor Vergata

Date Written: 2020

Abstract

We conduct a survey and incentivized lab-in-the-field experimental tasks in Tirana, Albania. While the original purpose of our study was to examine whether and how deep parameters such as time and risk preferences affect the intention to migrate, our study was transformed into a natural experiment owing to two large earthquakes that shook the Tirana area during our data-collection period. These events provide us with a rare opportunity to gather evidence (including a pre-earthquake control) on the effect of natural disasters on time and risk preferences. We find unambiguous effects towards more risk aversion and impatience for affected individuals. Moreover, as it turns out, the second earthquake amplified the effect of the first one, suggesting that experiences cumulate in their influence on these preferences.

Keywords: time preferences, risk preferences, natural disaster, Albania, migration

JEL Classification: B490, C900, D910, F220

Suggested Citation

Beine, Michel A. R. and Charness, Gary and Dupuy, Arnaud and Joxhe, Majlinda, Shaking Things Up: On the Stability of Risk and Time Preferences (2020). CESifo Working Paper No. 8187, Available at SSRN: https://ssrn.com/abstract=3570289 or http://dx.doi.org/10.2139/ssrn.3570289

Michel A. R. Beine (Contact Author)

University of Luxemburg ( email )

L-1511 Luxembourg
Luxembourg

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Gary Charness

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States
805-893-2412 (Phone)
805-893-8830 (Fax)

Arnaud Dupuy

Centre de Recherche en Économie Appliquée (CREA) ( email )

Campus Limpertsberg
162A, avenue de la Faïencerie
Luxembourg, 1511
Luxembourg

Majlinda Joxhe

University of Rome Tor Vergata ( email )

Via di Tor Vergata
Rome, Lazio 00133
Italy

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
181
Abstract Views
809
Rank
300,399
PlumX Metrics