Figure - available from: Journal of Economic Growth
This content is subject to copyright. Terms and conditions apply.
Source publication
Recent papers have modeled the prevalence of risk-tolerance as shaped by growth, making testable predictions about the distribution of risk-tolerance across the globe. We test these predictions using a dataset containing a survey question capturing people’s risk-tolerance for representative samples from 78 countries. We find a negative between-coun...
Similar publications
Citations
... However, high household wealth in a region can paradoxically inhibit the scaling of small firms. In regions with high household incomes, individuals may have less incentive to start their own businesses, as wealthier populations often have more stable and secure income streams which discourage risk-taking (Bouchouicha & Vieider, 2019). The availability of financial capital among wealthier individuals may also lead to a preference for passive investment strategies, such as real estate or stock market investments, rather than active engagement in the operational challenges of starting and growing a small business (Clayton et al., 2024). ...
... In contrast, the results showed household wealth in a region having negative effects in small firm scaling potential in 15 of the 23 sectors, suggesting that the higher the household income the less likely the scaling of small firms occurred in the select sector. This may happen because wealthier populations often enjoy more stable and secure incomes, which can reduce the motivation for entrepreneurial risk-taking (Bouchouicha & Vieider, 2019). Furthermore, affluent individuals may prefer passive investments, such as real estate or stocks, rather than actively engaging in the operational challenges of starting or growing a small business (Clayton et al., 2024). ...
Understanding the drivers of regional economic growth requires examining the mesoeconomic conditions that influence the ability of small firms to scale. This study investigates how the local composition of firms—by size and sector—along with socio-economic and geographic characteristics, affects the prevalence of Scaled Firms across U.S. labor market areas. Using cross-sectional data from 2022, the analysis applies a log-linear regression model to examine the relationship between the density of micro, midsize, and large firms and the share of Scaled Firms (defined as employing 5–99 workers) within industry sectors. Covariates include household wealth, educational attainment, unemployment, population diversity, and metropolitan classification. The results show that the presence of midsize and large firms, along with regional human capital and economic context, is significantly associated with higher levels of small firm scaling. These findings suggest that the mesoeconomic context plays an important role in shaping regional economic growth outcomes and that the composition of local firm ecosystems may influence a region’s capacity for resilience and inclusive development.
... They find that those with higher risk tolerance are more likely to become entrepreneurs and more successful in their ventures. Furthermore, Bouchouicha and Vieider (2019) find that economic growth is positively associated with higher levels of risk tolerance, which suggests that policies aimed at increasing risk tolerance may be beneficial for promoting entrepreneurship and economic growth. Dohmen et al. (2018) explore the relationship between cognitive ability and risk preference, including the role of information processing, perception of risk, and self-confidence. ...
This paper examines the decision-making processes of home buyers during the Global Financial Crisis, with a specific focus on passive coping mechanisms and the role of risk aversion. The study investigates how risk aversion influences the behavior of home buyers and highlights the disparities between high-income and low-income buyers. The findings reveal that high-income home buyers exhibit a risk aversion parameter that ranges from 1.74 to 1.99, while low-income home buyers have a parameter that ranges from 0.60 to 0.62, thus indicating different levels of risk tolerance and decision-making patterns among the income groups. These findings suggest that low-income home buyers are more likely to endure unfavorable situations or avoid making changes in periods of declining house prices than high-income home buyers. This behavior aligns with the concept of passive coping, where low-income home buyers choose to endure unfavorable situations rather than making changes because they fear the negative outcomes that may arise from taking a different course of action. They might worry that if they abandon the contract, they will miss out on the opportunity to own a home, live in a desirable neighborhood, or secure a specific property. This fear of potential losses leads them to choose passive coping, where they endure the current situation rather than making changes that could involve risks or uncertainties.
... This is in line with findings in other isolated, subsistence-oriented societies . In the PGG and DG, the participants did not behave according to rational economic theory, and in the LG risk aversion appears to be of minor importance (Bouchouicha & Vieider, 2019). Second, we find that there is little difference in contributions between the groups based on membership status, and that the standard deviation is fairly consistent over the different groups and games. ...
... While this finding is in line with the majority of previous studies (e.g. Schurer, 2015;Mata et al., 2016;Bouchouicha & Vieider, 2019), a substantial number of studies find a negative relation of age and risk aversion (e.g. Cardenas & Carpenter, 2013;Noussair et al., 2014;Andersson et al., 2016). ...
... Yet, previous studies also report negative associations (e.g. Mata et al., 2016;Bouchouicha & Vieider, 2019;Browne et al., 2020) or positive associations (e.g. Lee & Kang, 2016;Sepahvand & Shahbazian, 2017;Chapman et al., 2018a) between education and risk aversion. Similar to Castillo et al. (2018), Blake and Cannon (2019) and Bouchouicha and Vieider (2019) for example, we find that respondents with higher Income are less risk averse. ...
... Mata et al., 2016;Bouchouicha & Vieider, 2019;Browne et al., 2020) or positive associations (e.g. Lee & Kang, 2016;Sepahvand & Shahbazian, 2017;Chapman et al., 2018a) between education and risk aversion. Similar to Castillo et al. (2018), Blake and Cannon (2019) and Bouchouicha and Vieider (2019) for example, we find that respondents with higher Income are less risk averse. The relative majority of previous studies failed to find a statistically significant relation between income and risk aversion. ...
This paper empirically analyzes how individual characteristics are associated with risk aversion, loss aversion, time discounting, and present bias. To this end, we conduct a large-scale demographically representative survey across eight European countries. We elicit preferences using incentivized multiple price lists and jointly estimate preference parameters to account for their structural dependencies. Our findings suggest that preferences are linked to a variety of individual characteristics such as age, gender, and income as well as some personal values. We also report evidence on the relationship between cognitive ability and preferences. Incentivization, stake size, and the order of presentation of binary choices matter, underlining the importance of controlling for these factors when eliciting economic preferences.
... Variations in income per capita across countries show strong persistence over time. As theorized by Galor and Michalopoulos (2012), and empirically supported by Bouchouicha and Vieider (2019), there might be a negative effect of economic development on risk taking. In that case, risk-taking may not reflect an exogenous component of preferences but might be correlated with other factors that affect per capita incomes (e.g. ...
This paper empirically investigates the impact of willingness to take risks on entrepreneurship. We use a quarter century of data on second-generation Americans from Current Population Surveys in conjunction with a measure of willingness to take risks based on the Global Preference Survey. The level of risk taking in the country of origin is found to have a positive and significant impact on the likelihood of being an entrepreneur. A one-standard deviation increase in risk taking increases the probability of being an entrepreneur by 18%. We find that risk taking is also robust to other preference and cultural factors such as trust, patience, and individualism, as well as several deep-root determinants of development.
... Factors influencing entrepreneurs' risk attitude vary across gender (Block, Sandner, and Spiegel 2015). According to Block, Sandner, and Spiegel (2015) women entrepreneurs are more risk averse than men entrepreneurs whilst Bouchouicha and Vieider (2019) find male entrepreneurs to be more risk averse than females, though this varies by countries. Added to this, the few studies that exist in the Ghanaian context on the factors influencing the risk attitude of entrepreneurs have largely focussed on smallholder farmers (Asravor 2019) since agriculture is generally assumed to be a risky profession. ...
... The results of the study show that comparatively male entrepreneurs are more extreme risk averse than female entrepreneurs, whereas female entrepreneurs are comparatively more risk neutral than their male counterparts. This finding contradicts earlier findings of Araar et al. (2019), Barsky et al. (1997), Beckman and Menkhoff (2008) and Bouchouicha and Vieider (2019), all of whom found women to be less risk averse than men. From the Social feminism point of view, the capital needs of women differ from those of men, thus, in Ghana, females are involved in the trade and services subsector which are less risky due to the lower capital required to start such businesses. ...
Motivated by the recent increases in entrepreneurship in developing countries, this empirical article aims at determining the risk preferences of male and female entrepreneurs using cross-sectional data from 161 MSMEs in Ghana, and the Arrow-Pratt risk model. A multiple linear regression was later employed to ascertain factors influencing entrepreneurs’ attitudes toward risk. A decomposition of the risk attitude shows Ghanaian entrepreneurs to be generally risk averse. Upon further investigation, we find males to be more extreme risk averse than females, while females are more risk neutral than males. The gender difference in risk aversion is significantly explained by predictor variables, such as socio-economic factors, having access to funds, type of business operated, sector of operation, financial knowledge, and the cultural values of the entrepreneurs. We find a positive relationship between financial knowledge and attitude toward risk, and recommend the need for investment in both formal and informal education that increases the financial knowledge of entrepreneurs, hence, reduce the risk associated with entrepreneurship in Ghana. Theoretically, the article integrates cultural, financial knowledge, and religious variables into the determinant of risk attitude of male and female entrepreneurs and practically demonstrates that increasing the financial knowledge decreases the risk aversion nature of entrepreneurs.
... If anything, advanced economies are experiencing a very undynamic form of capitalism, amounting to a move away from the entrepreneurial toward the 'ossified economy' 1 -to borrow an adjective from Cowan (2017). The ossified economy refers to an economy that is characterised by a decline in business dynamism [e.g., Decker et al. (2016a)], a decline in innovation and productivity growth [e.g., Gordon (2012)], and a decrease in risk-tolerance [e.g., Bouchouicha and Vieider (2019)]. ...
... advanced economies (Bouchouicha and Vieider, 2019). However, whether population ageing is implicated in the decline of entrepreneurship in the USA is doubtful because its population has not aged as in Europe. ...
Entrepreneurship in advanced economies is in decline. Instead of becoming ‘entrepreneurial’, as was anticipated in the 1990s, today, these economies are better described as ossified. This paper starts by documenting the decline in entrepreneurship. It then critically discusses extant explanations for the decline. While having merit, these explanations are restricted to proximate and supply-side causes. Given these shortcomings, an additional perspective is contributed: it is argued that adverse scale effects from rising complexity, and long-run aggregate demand changes, account for the ossification of advanced economies. Implications for entrepreneurship scholarship are drawn.
... According to the analysis of the discussion of the most important problematic aspects of development that took place at the largest discussion platforms this year [1,2,3], the mainstream of economic research are: first, identification and study of new contexts of development patterns and, accordingly, mechanisms for their consideration; second, search for methods and technologies to keep the integrity and stability of national economies; third, formation of strategies to overcome structural crises that affected all countries without exception; fourth, the stimulation of constructive processes of expanded reproduction; fifth, the restructuring of living spaces and, accordingly, the real estate sector. Ensuring the quality of life activities framework created by economic entities engaged in the real estate sector has become not only a subject of state regulation but also a basic condition for development [4][5][6][7][8][9][10]. It is quite obvious that the real estate sector, despite the conservatism associated with the life cycle of its objects, cannot develop separately from technological, economic, social, institutional, and ideological changes [11]. ...
The present time is increasingly characterized as a time of conflicts and shocks. The conditions of permanent destabilization of economic and social processes, the breakdown of the cultural model of development and the unprecedented pace of innovative changes that precede the transition to an integrated world economic system, required the restructuring of the real estate sector. Identification of goals, directions, and tools of restructuring that are adequate to contemporary concepts, accumulated experience, and best international practices is becoming almost a decisive factor for the successful radical transformation of the real estate sector. It forms a new living space responding to the demands of the production and consumer sectors of the national economy. The performed analysis of the requirements for the strategic analysis of the up-to-date real estate sector showed the urgent need to correct the meanings of development in accordance with the new culture of evaluating its effectiveness, eliminating false optimistic assessments of real estate as an investment asset, and forming up-to-date requirements not only to new construction but also to all forms of real estate reproduction.
... The training mainly prepared graduates to seek employment -either in organisations or factories. It is believed that those who venture into entrepreneurship seem to have a higher tolerance for risk (Van Gelderen et al., 2015;Costa & Mainardes, 2016;Bouchouicha & Vieider, 2019;Kerr et al., 2019). As self-evident as this may seem, some studies show contradictory results. ...
The importance of commercializing research outputs by science, technology, engineering, arts and mathematics (STEAM) researchers for technological advancement and socio-economic development cannot be overemphasized. This study thus investigates the factors that motivate researchers in the STEAM field to startup businesses based on their research. A multistage sampling method was used to draw a sample of 201 researchers, consisting of lecturers and students from a top-ranking university in Nigeria. The study used a set questionnaire to elicit information on factors that influence the decision of STEAM researchers to spin off business start-ups from their research. Principal Component Analysis and Binary Logistic Regression were used to determine the association between the dependent and independent variables. The findings revealed that the important driver of academic spin-off for the STEAM researchers was the level of risk tolerance. It was evident that risk-taking had a strong relationship with quality research and business start-up.
... The validity of assuming that patterns in individual behavior scale to group-level behavior is exacerbated by a phenomenon known as Simpson's Paradox, in which a trend found at the population level can actually reverse when evaluated at a subpopulation level (Kievit et al., 2013) . Such is the case of economic risk preferences, in which country-level GDP per capita is related to more risk-aversion but household level income is related to more risk-tolerance (Bouchouicha & Vieider, 2019) . To combat these types of limitations, researchers could privilege longitudinal projects, focus on gathering data at multiple levels, and exercise more caution when drawing inferences about individual-level processes from group-level data (Pollet et al., 2014) . ...
Like psychology more broadly, developmental psychology has long suffered from a narrow focus on children from WEIRD societies—or those that are Western, Educated, Industrialized, Rich, and Democratic. In this review, we discuss how developmental scientists have sought to correct this bias through two complementary approaches: one centered on detailed, ethnographic investigations of child development within populations (increasing the depth of our understanding) and one focused on larger, multi-site studies that test children on standardized tasks across populations (increasing breadth) . We review key papers from each of these approaches, describe how they are currently practiced, and discuss their strengths and weaknesses. Next, we highlight exemplary papers from the adult literature that offer useful insights, namely the importance of formal modeling and a greater focus on studying variation at multiple levels of analysis. We end by outlining best practices for future waves of cross-cultural, developmental science. Overall, we argue that a more integrated perspective, combining the strengths of the breadth & depth approaches, can help better elucidate the developmental origins of human behavioral diversity.
