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Risk Attitudes in Late Adulthood: Do Parenthood Status and Family Size Matter?
Abstract
How older persons react to high-stakes decisions concerning their finance and healthcare depends a great deal on their orientation towards risk-taking. This study examines the associations between parenthood status, family size, and risk attitudes in late adulthood based on nationally-representative data from the Singapore Life Panel. Multivariate analyses are employed to estimate how older adults' willingness to take risks in the general, financial, and health domains varies by gender and among childless individuals and parents of different family size. Older mothers are found to be less risk tolerant than their childless counterparts across the three risk domains. Conversely, mothers with more children demonstrate greater risk tolerance than mothers with fewer children. We find no evidence that older men's risk attitudes vary by parenthood status and family size. We discuss the implications of our findings for understanding individual and societal well-being in the context of rapid fertility decline and population aging.
... With the current total fertility rate of 0.97, Singapore is expected to be the world's fifth oldest country by mid-century (Malhotra et al., 2019). Presently, nearly 15% of Singaporeans aged 60+ are childless, a rate surpassing that of several western countries (Ho et al., 2023;Sobotka, 2017). Additionally, one in five Singaporeans in their 50s currently does not have children (Yeung & Hu, 2018). ...
Objectives
Despite the rising prevalence of individuals reaching advanced age without children, little is known about the diversity in support networks within childless populations. We examine the network profiles of childless adults aged 50+ in Singapore, which observes high childlessness rates despite societal emphasis on familism.
Methods
We employ latent class analysis to derive network typology based on a 2022 nationwide survey in Singapore. Additionally, we use logistic regression analyses to investigate the sociodemographic correlates of childless individuals’ network types and the associations between these network types and subjective well-being.
Results
Childless Singaporeans form a heterogeneous group characterized by different support networks. Evidence suggests the centrality of parents in the childless’ social networks and the continuity of parent-child support exchanges that extend into the child’s midlife and late adulthood. When parents are absent, siblings/extended kin serve as their support sources. Age, sibship size, and socioeconomic status are key correlates of network types. Membership in diverse networks is beneficial to the subjective well-being of childless individuals. Although one-fifth of childless individuals in restricted networks demonstrate significantly poorer well-being, the remaining four-fifths show comparable, if not better, well-being than the non-childless.
Discussion
Results underscore the importance of differentiating network types among the childless, particularly when assessing their well-being. Contrary to the notion associating later-life childlessness with social isolation and vulnerabilities, many childless Singaporeans manage to construct non-child-based networks equipped with various supportive relations that cater to their needs. Nevertheless, persistent vulnerabilities among restricted network members deserve policymakers’ attention.
Objective
This brief report aims to explore the role of childlessness and its interaction with sibling positioning (i.e., birth order and gender) in upward intergenerational support within the context of Asian familial and patrilineal values.
Background
Despite the increasing rates of childlessness in Asia, little is known about how childless individuals deviate from or adhere to the patrilineal gendered practices of supporting their older parents. Singapore, a rapidly aging nation that emphasises Confucian familism values and patrilineal practices in guiding its welfare policies, provides an ideal setting for this research investigation.
Method
We analysed a sample of 475 Singaporeans aged 50 and above with at least one living parent from a recent nationwide survey. We utilised multivariate regressions to examine the associations between childlessness and various types of upward intergenerational support, with further heterogeneity analyses based on sibling positioning.
Results
The traditional patrilineal pattern of first‐born sons providing the most financial transfers to aging parents was found among non‐childless individuals. In contrast, all childless individuals, regardless of their birth order and gender, played a significant role in providing intergenerational support, particularly in instrumental and associational support, as well as maintaining geographical proximity to their parents.
Conclusion
Childless individuals in Singapore were found to shoulder the primary responsibility for supporting parents, thus upholding the values of filial piety and familism. Results further suggest that the rising prevalence of childlessness may contribute to the erosion of patrilineal norms in upward intergenerational support in Asia.
Objective: This article offers a theoretical and empirical contribution to the fertility literature by considering the role of risk tolerance in the fertility decision making process.
Background: Despite a long tradition in fertility research emphasizing the great uncertainty underlying the decision to have children, the role of risk tolerance has been overlooked. Elaborating on previous theoretical approaches including those that have considered children as a “security” or as a “risky investment”, we analyze whether and how risk aversion is related to fertility outcomes.
Method: The analyses are based on longitudinal data from the Survey of Household Income and Wealth carried out by the Bank of Italy and rely on a lottery question to measure risk tolerance. Probit models for the probability of having the first and second child are estimated.
Results: Results indicate that the most risk averse individuals have the highest probability to have a(n additional) child. This is consistent with the theoretical approaches that conceptualizes children as an insurance and an immanent value. These results are particularly evident for low-income individuals.
Implications: The findings point to the importance of considering risk tolerance in fertility research to gain a more complete understanding of heterogeneities in fertility behaviors.
This study estimates the effect of county‐level public health expenditures in reducing county‐level public assistance medical care benefits (public assistance medical care benefits is a measure compiled by the US Bureau of Economic Analysis and includes Medicaid and other medical vendor payments). The effect is modeled using a static panel model and estimated using two‐stage limited information maximum likelihood and a valid instrumental variable. For every 3.12 (95% confidence interval: −0.94). Because Medicaid in California is financed via an approximate 50% match of federal dollars with state dollars, savings to the state are approximately one‐half of this, or 1 invested in county‐level public health expenditures.
Subjective wellbeing is designed to consider positive experiences and to be descriptive of an overall assessment rather than focusing on specific experiences or aspects of an individual’s life. The purpose of this study is to investigate the relationships between the holding of risky financial assets and subjective wellbeing. Participation in financial markets with different risk levels of assets is divided into holding risk-free assets and holding risky assets. Holding risk-free assets is measured according to two sets of variables: having a demand deposit and having certificates of deposit. Moreover, the holding of risky financial assets is also measured by two sets of variables: holding stocks and holding mutual funds. Using data from the 2011 and 2013 China Household Finance Survey (CHFS), the results indicate that the impact of holding risk-free assets in the financial market on subjective wellbeing is positive, while holding risky assets is found to contribute negatively to subjective wellbeing. The results imply that to improve subjective wellbeing, financial policy-makers and investment institutions should develop effective policies and financial products to improve the efficiency of financial markets, and thereby provide more low-risk financial assets.
What governs labour force participation in later life and why is it so different across countries? Health and labour force participation in older ages are not strongly linked, but we observe a large variation across countries in old-age labour force participation. This points to the important role of country-specific regulations governing pension receipt and old-age labour force participation. In addition to the statutory eligibility age for a pension, such country-specific regulations include: earnings tests that limit the amount of earnings when pension benefits are received; the amount of benefit deductions for early retirement; the availability of part-time pensions before normal retirement; special regulations that permit early retirement for certain population groups; and either subsidies or extra costs for employers if they keep older employees in their labour force. This paper asks two questions: Can we link a relatively low labour force participation at ages 60–64 to country-specific regulations that make early retirement attractive? and Can we link a relatively high labour force participation at ages 65–74 to country-specific regulations that make late retirement attractive? To answer these questions, we compared the experiences in a set of developed countries around the world in order to understand better the impact of country-specific rules and laws on work and retirement behaviour at older ages and, by consequence, on the financial sustainability of pension systems.
This study analyzes whether parental monetary investments in children stimulate support from sons and daughters. Using data from the China Health and Retirement Longitudinal Study, I find that parents invested twice more in sons than in daughters in terms of college education spending and marriage gifts value. Conversely, higher parental monetary investments are associated with higher increases in support from daughters than from sons in terms of best living proximity and most help with activities of daily living. Parental monetary investments in sons’ college education are positively associated with sons’ income and negatively associated with sons’ instrumental support, suggesting that such investments potentially generate higher opportunity costs of time for sons. Meanwhile, parental monetary investments in daughters’ marriage are positively associated with daughters’ instrumental support, which may occur through an income effect or through reciprocity from daughters. There is no conclusive evidence that parental monetary investments stimulate monetary and in-kind transfers from children, suggesting that material support possibly occurs out of social norm courtesy.
This study aims at understanding the role of education in promoting disaster preparedness. Strengthening resilience to climate-related hazards is an urgent target of Goal 13 of the Sustainable Development Goals. Preparing for a disaster such as stockpiling of emergency supplies or having a family evacuation plan can substantially minimize loss and damages from natural hazards. However, the levels of household disaster preparedness are often low even in disaster-prone areas. Focusing on determinants of personal disaster preparedness, this paper investigates: (1) pathways through which education enhances preparedness; and (2) the interplay between education and experience in shaping preparedness actions. Data analysis is based on face-to-face surveys of adults aged �15 years in Thailand (N = 1,310) and the Philippines (N = 889, female only). Controlling for socio-demographic and contextual characteristics, we find that formal education raises the propensity to prepare against disasters. Using the KHB method to further decompose the education effects, we find that the effect of education on disaster preparedness is mainly mediated through social capital and disaster risk perception in Thailand whereas there is no evidence that education is mediated through observable channels in the Philippines. This suggests that the underlying mechanisms explaining the education effects are highly context-specific. Controlling for the interplay between education and disaster experience, we show that education raises disaster preparedness only for those households that have not been affected by a disaster in the past. Education improves abstract reasoning and anticipation skills such that the better educated undertake preventive measures without needing to first experience the harmful event and then learn later. In line with recent efforts of various UN agencies´in promoting education for sustainable development, this study provides a solid empirical evidence showing positive externalities of education in disaster risk reduction.
In this essay Charlene Tan offers a philosophical analysis of the Singapore state's vision of shared citizenship by examining it from a Confucian perspective. The state's vision, known formally as “Our Shared Values,” consists of communitarian values that reflect the official ideology of multiculturalism. This initiative included a White Paper, entitled Shared Values, which presented pejorative assessments of the ideals of “individual rights” and “individual interests” as antithetical to national interests. Rejecting this characterization, Tan argues that a dominant Confucian perspective recognizes the correlative rights of all human beings that are premised on the inherent right to human dignity, worth, and equality. Furthermore, Confucianism posits that it is in everyone's interest to attain the Confucian ethical ideal of becoming a noble person in society through self‐cultivation. Tan concludes by highlighting two key implications for Singapore from a Confucian perspective on the Shared Values: first, schools in Singapore should place greater emphasis on individual moral development of their students, and second, more avenues should be provided for residents to contribute actively to the development of the vision of shared citizenship.
Older adults face important risky decisions about their health, their financial future, and their social environment. We examine age differences in risk-taking behaviors in multiple risk domains across the adult life span.
A cross-sectional study was conducted in which 528 participants from 18 to 93 years of age completed the Domain-Specific Risk-Taking (DOSPERT) scale, a survey measuring risk taking in 5 different domains.
Our findings reveal that risk-taking tendencies in the financial domain reduce steeply in older age (at least for men). Risk taking in the social domain instead increases slightly from young to middle age, before reducing sharply in later life, whereas recreational risk taking reduces more steeply from young to middle age than in later life. Ethical and health risk taking reduce relatively smoothly with age. Our findings also reveal gender differences in risk taking with age. Financial risk taking reduced steeply in later life for men but not for women, and risk taking in the social domain reduced more sharply for women than for men.Discussion.We discuss possible underlying causes of the domain-specific nature of risk taking and age.
This study validates a survey-based measure of general risk attitude by an incentive compatible experiment among more than 900 participants in rural Thailand. The survey measure of self-assessed risk attitude provides a useful approximation of the experimentally derived risk attitude. This holds when we add various socio-demographic control variables to the survey-experiment-relation which are available from the representative household survey and which are related to risk attitude in plausible ways. The survey measure also predicts individual behavior towards risk in other cases; the survey measure even outperforms the experimental measure in this respect.
Are men more willing to take financial risks than women? The answer to this question has immediate relevance for many economic issues. We assemble the data from 15 sets of experiments with one simple underlying investment game. Most of these experiments were not designed to investigate gender differences and were conducted by different researchers in different countries, with different instructions, durations, payments, subject pools, etc. The fact that all data come from the same basic investment game allows us to test the robustness of the findings. We find a very consistent result that women invest less, and thus appear to be more financially risk averse than men.
We estimate a dynamic life-cycle model of labor supply, fertility and savings, incorporating occupational choices, with specific wage paths and skill atrophy that vary over the career. This allows us to understand the trade-off between occupational choice and desired fertility, as well as the sorting both into the labor market and across occupations. We quantify the life-cycle career costs associated with children, how they decompose into loss of skills during interruptions, lost earnings opportunities and selection into more child-friendly occupations. We analyze the long-run effects of policies that encourage fertility and show that they are considerably smaller than short-run effects.
We present a psychometric scale that assesses risk taking in five content domains: financial decisions (separately for investing versus gambling), health/safety, recreational, ethical, and social decisions. Respondents rate the likelihood that they would engage in domain-specific risky activities (Part I). An optional Part II assesses respondents’ perceptions of the magnitude of the risks and expected benefits of the activities judged in Part I. The scale’s construct validity and consistency is evaluated for a sample of American undergraduate students. As expected, respondents’ degree of risk taking was highly domain-specific, i.e. not consistently risk-averse or consistently risk-seeking across all content domains. Women appeared to be more risk-averse in all domains except social risk. A regression of risk taking (likelihood of engaging in the risky activity) on expected benefits and perceived risks suggests that gender and content domain differences in apparent risk taking are associated with differences in the perception of the activities’ benefits and risk, rather than with differences in attitude towards perceived risk.
Fatherhood can be a turning point in development and in men's crime and substance use trajectories. At-risk boys (N = 206) were assessed annually from ages 12 to 31 years. Crime, arrest, and tobacco, alcohol, and marijuana use trajectories were examined. Marriage was associated with lower levels of crime and less frequent substance use. Following the birth of a first biological child, men's crime trajectories showed slope decreases, and tobacco and alcohol use trajectories showed level decreases. The older men were when they became fathers, the greater the level decreases were in crime and alcohol use and the less the slope decreases were in tobacco and marijuana use. Patterns are consistent with theories of social control and social timetables.
Older adults' decision quality is considered to be worse than that of younger adults. This age-related difference is often attributed to reductions in risk tolerance. Little is known about the circumstances that affect older adults' decisions and whether risk attitudes directly influence economic decisions. We measure the influence of risk attitudes on age-related differences in decision making in both nonsocial and social contexts.
Risk attitudes and economic decision making were measured in 30 healthy older adults and 29 healthy younger adults.
Older adults report being less impulsive, sensation seeking and risk tolerant than younger adults. Age did not affect a measure of nonsocial economic decision making. Older adults were more likely to reject unfair divisions of money during an economic social-bargaining game and more likely to make equitable divisions of money during social-giving game. These age-related differences were determined in part by individuals' self-reported risk taking.
We conclude that age-related differences in decision making are domain specific and that some social economic decision making is influenced by risk attitudes. Older adults are more risk avoidant, but this does not alter their willingness to wait for reward in a nonsocial context. Perceiving more risk is associated with an unwillingness to accept an unfair offer in social economic contexts and ultimately leads to poorer outcomes for older adults.
Geographic mobility is important for the functioning of labor markets because it brings labor resources to where they can be most efficiently used. It has long been hypothesized that individuals' migration propensities depend on their attitudes towards risk, but the empirical evidence, to the extent that it exists, has been indirect. In this paper, we use newly available data from the German Socio-Economic Panel to measure directly the relationship between migration propensities and attitudes towards risk. We find that individuals who are more willing to take risks are more likely to migrate between labor markets in Germany. This result is robust to stratifying by age, sex, education, national origin, and a variety of other demographic characteristics, as well as to the level of aggregation used to define geographic mobility. The effect is substantial relative to the unconditional migration propensity and compared to the conventional determinants of migration. We also find that being more willing to take risks is more important for the extensive than for the intensive margin of migration
This article reviews and presents research findings on the relationships between parenthood and health over the life span. Existing research shows lacunae. The links between reproductive behavior and longevity generally focus on family size rather than contrasting parents and nonparents. Studies of marital status differentials in survival generally confound the effects of parenthood and marital status. Studies of the effects of multiple roles (combining parenthood, marriage, and employment) have the drawback that parenthood is equated with currently having children in the home. The authors provide new evidence on the health of people who have reached old age, contrasting those with and without children, in an attempt to tease out the effects of parenthood, marital status, and gender. Data from Australia, Finland, and the Netherlands are used. Insofar as parenthood effects are found, they pertain to health behaviors (smoking, alcohol consumption, and physical exercise), providing evidence for the social control influences of parenthood.
Gender differences in the risk and protective factors of marijuana use among college students were explored by analyzing online survey responses from 464 undergraduates. Women perceived higher risk and used marijuana less than men, with no gender difference in peer disapproval. In addition, women had higher objective knowledge regarding the health effects of marijuana, although they exhibited lower confidence in their knowledge. In subsequent regression analyses, health knowledge, confidence in knowledge, perceived risk, and peer disapproval predicted women’s marijuana use, whereas only confidence in knowledge and perceived risk predicted men’s use. These findings can help devise effective intervention strategies.
This study analyzes how risk attitudes change when individuals experience the major life event of becoming a parent by using longitudinal data for a large and representative sample of individuals from Germany. The analysis uses a survey-based measure of risk aversion. The estimation is based on an individual fixed effects model similar to an event study. On average, men and women experience a considerable increase in risk aversion around the time of first childbirth. This increase already starts as early as two years before they become parents, it is largest shortly after childbirth and it disappears when the child becomes older. When analyzing risky choices, the results indicate that risky labor market behavior remains unaffected by parenthood.
Financial literacy in Singapore has not been analyzed in much detail, despite the fact that this is one of the world's most rapidly aging nations. Using the Singapore Life Panel®, we explore older Singaporeans’ levels of financial knowledge and compare them to those observed in the United States. We assess portfolio complexity for these older households, to examine how financial literacy is related to outcomes of interest. We show that older Singaporeans’ levels of financial literacy are comparable overall to those in the United States, even though older Singaporeans score slightly lower on some dimensions (knowledge of interest and inflation), and slightly higher on their knowledge of risk diversification. We document that women are less informed than men about stock diversification, and educated people tend to be more financially knowledgeable than their less educated counterparts. We also find that financial literacy is positively associated with respondents having both more wealth and more diversified and complex portfolios.
Facing a rapidly ageing population, Singapore is presented with urgent policy challenges. Yet there is very little data on the economic, health and family circumstances of older Singaporeans. In response, the Centre for Research on the Economics of Ageing (CREA) at Singapore Management University has been collecting monthly data on a panel of Singaporeans aged between 50 and 70 years. We detail the methodology by which the Singapore Life Panel® (SLP) was constructed using a population-representative sampling frame from the Singapore Department of Statistics. Contact was made with 25,000 households through postal, phone and in-person canvassing. More than 15,200 respondents from over 11,500 households enrolled in the panel. Comparisons between SLP and official statistics show close matching on age, sex, marital status, ethnicity, education, labor force status, income and expenditure. This suggests that the panel is a representative of Singapore’s elderly population. Monthly surveys continue to be administered over the internet, supplemented by phone and in-person outreach to ensure the panel remains representative and hence reliable for informing policy makers. Response rates are remarkably stable at over 8000 per month. The SLP contains rich data on demographics, health status, socio-economic indicators, contact with government programmes and subjective perceptions and is likely to be a key resource for economic research into ageing in Singapore.
Objective
To examine the role of variations in mature age labour force participation on labour force outcomes over Australia's recent past (2000-2015) and immediate future (to 2030). Methods
To estimate the impact of rises in mature age participation on observed labour supply, we utilise demographic decomposition techniques. To examine future labour supply (to 2030), we simulate scenarios utilising a cohort-component projection model. ResultsObserved increases in mature age participation between 2000 and 2015 added approximately 786000 mature age workers to the Australian labour force. Over the proceeding 15years (2015-2030), conservative changes to prevailing mature age participation would add 304000 additional workers. The speed of ageing is projected to increase and labour supply growth decrease in the next 15years relative to that observed from 2000 to 2015. Conclusion
To benefit from increased mature age labour force participation, the barriers to mature age participation must be addressed.
This article investigates how risk attitudes change over the life course. We study the age trajectory of risk attitudes all the way from early adulthood until old age, in large representative panel data sets from the Netherlands and Germany. Age patterns are generally difficult to identify separately from cohort or calendar period effects. We achieve identification by replacing calendar period indicators with controls for the specific underlying factors that may change risk attitudes across periods. The main result is that willingness to take risks decreases over the life course, linearly until approximately age 65 after which the slope becomes flatter.
Using data from the 2012 Health and Retirement Study, this study examined whether gender was associated with risk bearing in portfolio choices among single workers nearing retirement. Also, the study investigated how human capital was associated with the worker's allocation of risk-bearing assets by gender. The results of logistic regression revealed that while gender was statistically significant, education level was also a significant predictor of holding risky assets. Since differences in human capital explained the difference in portfolio choices for male and female workers, financial educators should consider this finding as they attempt to help the least financially savvy populations with financial education programs.
Background:
Non-medical use (NMU) of prescription opioids in youth is of concern since they may continue this pattern into adulthood and become addicted or divert medications to others. Research into risk factors for NMU can help target interventions to prevent non-medical use of opioids in youth.
Method:
The National Monitoring of Adolescent Prescription Stimulants Study (N-MAPSS) was conducted from 2008 to 2011. Participants 10-18years of age were recruited from entertainment venues in urban, rural and suburban areas of 10 US cities. Participants completed a survey including questions on their use of prescription opioids. NMU was defined as a non-labeled route of administration or using someone else's prescription. Information on age, gender, alcohol, marijuana and tobacco use was also collected. Summary descriptive, chi-square statistics and logistic regression were conducted using SAS 9.4.
Results:
Of the 10,965 youth who provided information about past 30day prescription opioid use, prevalence of reported opioid use was 4.8% with 3.2% reported as NMU (n=345) and 1.6% as medical use (MU) only (n=180). More males than females (55.7% vs. 44.4%) reported opioid NMU (p<0.0001). Logistic regression revealed that among males (comparing NMU to MU only), current smokers were 4.4 times more likely to report opioid NMU than non-smokers (95% CI: 1.8, 10.7). Among females (comparing NMU to MU only), current smokers and alcohol users were more likely to report opioid NMU than those who had never smoked or used alcohol (OR=3.2, 95% CI: 1.4, 7.0 and OR=4.1, 95% CI: 1.7, 10.4, respectively).
Conclusions:
These results suggest that further research on gender differences in opioid NMU is needed; interventions for opioid NMU may need to be gender specific to obtain the best results.
Section:
ChooseTop of pageAbstract <<I. IntroductionII. Demographic Data for ...III. ModelIV. Quantitative AnalysisV. Conclusion
References
We study the effects of projected population aging on potential growth in Asian economies over the period 2015–2050. We find that an increase in the share of the population over 64 years of age will significantly lower output growth through decreased labor participation. Population aging can also reduce economic growth through increased labor income taxes and dampened productivity growth.
Increasing number of older adults manage their retirement savings online. A crucial element of better management is to take rational financial risk -- to strike a reasonable balance between expected gain and loss under uncertainty. With the emergence of Web 2.0 technologies, social trading networks can help individuals make better financial decisions by providing information about others' actions. It is, however, unclear whether these resources is beneficial to older adult's own financial decisions, especially because older adults are vulnerable to poor risk management. To address this question, we devise an experiment that improves upon an existing experimental economic task. We find that both peer information (detailed choices by a few individuals) and majority information (aggregated choices of the crowd) help older adults make more risk-neutral decisions. Furthermore, the combination of peer and majority information corrects more mistakes of more risk-averse older adults.
The role of collaboration networks within and across cities as drivers of urban creativity and new knowledge creation is increasingly acknowledged in the literature. We propose that the combination of (1) high internal social proximity between co-inventors within a city and (2) local cliques of inventors in which interaction is dense allows a city to achieve greater inventive creativity. Internal social proximity allows knowledge to circulate quickly across a larger pool of sources; dense cliques promote trust, cooperation, and a more effective use of the acquired knowledge. Moreover, social proximity between a city's inventors and inventors outside the city contributes to enriching and renewing a city's knowledge base by facilitating faster access to fresh external knowledge. We find evidence to support these propositions in a study of the inventive productivity of 331 U.S. cities.
This paper offers robust empirical evidence of a Darwinian pro-natalist mechanism: parents can improve their old-age support with an additional child. Using the incidence of first-born twins as an instrument for fertility outcomes, I find that Chinese senior parents with more children receive more financial transfers and are more likely to co-reside with an adult child. They are also less likely to work past retirement age. The estimated effects are large, despite the evidence that adult children from larger families are less educated and earn significantly less. Interestingly, the effect of an increase in the number of children on old-age support does not depend on the child’s gender.
The topic of inheritance has taken on new meaning in social discourses on aging within numerous disciplines in the social and behavioral sciences. Understanding the social dimensions of giving across generations is key to understanding how changes in traditional expectations and practices will affect family life in general, and how adult children and their elderly parents will receive support, as they grow older. Inheritance and bequests can have a significant impact on retirement security and quality of life as people grow older. The two dominant explanations of motivations for intergenerational transfers (altruism and exchange) have interesting implications for the expected relationship between public and private transfers before and after death. This chapter provides a basic understanding of what is known about the concept of inheritance and gift-giving in terms of how older people balance the competing claims of helping family members during their lifetimes, saving for old age, and leaving a meaningful inheritance. One study of family inheritance practices based on in-depth interviews of late-life families examines differences based on social characteristics in exchange patterns, the feelings of commitment toward performing roles and to meeting filial obligations, and the extent to which economic factors constrain the decision to give gifts in later life. Further study of the social implications of inheritance for baby boomers and generations to come is also needed, including analyses of the impact of wealth transfers among family members during their lifetimes as well as at death.
We examine whether the experience of shocks influences individual risk attitude. We measure the risk attitude of more than 4,000 households in Thailand and Vietnam via a simple survey item. The experience of adverse shocks, which is typical for poor and vulnerable households, is related to a higher degree of risk aversion, even when controlled for a large set of socio-demographic variables. Therefore, shocks perpetuate vulnerability to poverty via their effect on risk attitude. We extend this general finding to various categories of shocks and find differences between Thailand and Vietnam. This suggests that risk-coping strategies profit from case-specific design.
This article proposes a new method of obtaining identification in mismeasured regressor models, triangular systems, and simultaneous equation systems. The method may be used in applications where other sources of identification, such as instrumental variables or repeated measurements, are not available. Associated estimators take the form of two-stage least squares or generalized method of moments. Identification comes from a heteroscedastic covariance restriction that is shown to be a feature of many models of endogeneity or mismeasurement. Identification is also obtained for semiparametric partly linear models, and associated estimators are provided. Set identification bounds are derived for cases where point-identifying assumptions fail to hold. An empirical application estimating Engel curves is provided.
Using data from a large national survey, this paper documents substantial differences by gender and race in smoking behavior, seat belt use, preventative dental care measured by teeth brushing and flossing, exercise, and whether the individual checks his or her blood pressure. White women are the most protective of their health, while black males are the least likely to take health-enhancing actions. However, the racial gap in safety behavior narrows considerably or reverses after controlling for demographic, human capital, and labor market characteristics that affect safety choices. On the other hand, the safety gap by gender increases after controlling for characteristics.
The validity of existing empirical tests of the Pollution Haven Hypothesis (PHH) is constantly under scrutiny due to two shortcomings. First, the issues of unobserved heterogeneity and measurement error in environmental regulation are typically ignored due to the lack of a credible, traditional instrumental variable. Second, while the recent literature has emphasized the importance of geographic spillovers in determining the location choice of foreign investment, such spatial effects have yet to be adequately incorporated into empirical tests of the PHH. As a result, the impact of environmental regulations on trade patterns and the location decisions of multinational enterprises remains unclear. In this paper, we circumvent the lack of a traditional instrument within a model incorporating geographic spillovers utilizing three novel identification strategies. Using state-level panel data on inbound U.S. FDI, relative abatement costs, and other determinants of FDI, we consistently find (i) evidence of environmental regulation being endogenous, (ii) a negative impact of own environmental regulation on inbound FDI in pollution-intensive sectors, particularly when measured by employment, and (iii) larger effects of environmental regulation once endogeneity is addressed. Neighboring environmental regulation is not found to be an important determinant of FDI.
This paper studies risk attitudes using a large representative survey and a complementary experiment conducted with a representative subject pool in subjects' homes. Using a question asking people about their willingness to take risks “in general”, we find that gender, age, height, and parental background have an economically significant impact on willingness to take risks. The experiment confirms the behavioral validity of this measure, using paid lottery choices. Turning to other questions about risk attitudes in specific contexts, we find similar results on the determinants of risk attitudes, and also shed light on the deeper question of stability of risk attitudes across contexts. We conduct a horse race of the ability of different measures to explain risky behaviors such as holdings stocks, occupational choice, and smoking. The question about risk taking in general generates the best all-round predictor of risky behavior.
Family development and prospect theory were used as a framework to predict variability in individuals' subjective financial risk tolerance within distinct family structures. Gender, age, and income were expected to interact with the main effects of family structure (marital status and children). Theory-generated hypotheses were examined in Study 1 (data from university housing respondents, n = 76) and Study 2 (the 1998 Survey of Consumer Finances, n = 4,305). One family structure main effect (child presence) was significant for investment risk tolerance in both studies. Family structure interactions (marital status age and child income) were significant for employment risk (Study 1), and child age was significant for investment risk in Study 2.
This study examines household risk taking, using Swedish cross-sectional data based on tax returns from more than 7000 households for 1985. In contrast to previous studies, this study recognizes that households compose different risky portfolios because of their varying characteristics. This study also recognizes real assets as investment goods and takes into account the gains from diversification that emerge when real assets and financial assets are combined. The estimated risk aversion was found to be very large but not systematically correlated with any of the included variables, with the exception of age. The estimated age coefficient suggests that risk aversion increases with age.
Making use of a unique representative data set, we find clear evidence that risk aversion has a highly significant and substantial negative impact on the probability that an employee's pay is performance contingent, which confirms the well known risk-incentive trade-off.
As population aging becomes more pronounced in the developing world, the uneven implementation of social safety nets raises important questions as to how well traditional family-based mechanisms insure elderly incomes when pension systems fail. Using a unique dataset from a recent household survey conducted in urban China, we find evidence that private transfers respond to low household income of retired workers when income falls below the poverty line. This finding is consistent with an altruistic motive for transfers at low levels of household income. At the same time, however, the transfer response to elderly pre-transfer income is not sufficient to fully cover shortfalls that arise with severe pension arrears and low retirement income.
Women are generally more risk averse than men. We investigated whether between- and within-gender variation in financial risk aversion was accounted for by variation in salivary concentrations of testosterone and in markers of prenatal testosterone exposure in a sample of >500 MBA students. Higher levels of circulating testosterone were associated with lower risk aversion among women, but not among men. At comparably low concentrations of salivary testosterone, however, the gender difference in risk aversion disappeared, suggesting that testosterone has nonlinear effects on risk aversion regardless of gender. A similar relationship between risk aversion and testosterone was also found using markers of prenatal testosterone exposure. Finally, both testosterone levels and risk aversion predicted career choices after graduation: Individuals high in testosterone and low in risk aversion were more likely to choose risky careers in finance. These results suggest that testosterone has both organizational and activational effects on risk-sensitive financial decisions and long-term career choices.
The slow diffusion of new technology in the agricultural sector of developing countries has long puzzled development economists. While most of the current empirical research on technology adoption focuses on credit constraints and learning spillovers, this paper examines the role of individual risk attitudes in the decision to adopt a new form of agricultural biotechnology in China. I conducted a survey and a field experiment to elicit the risk preferences of 320 Chinese farmers, who faced the decision of whether to adopt genetically modified Bt cotton a decade ago. Bt cotton is more effective in pest prevention and thus requires less pesticides than traditional cotton. In my analysis, I expand the measurement of risk preferences beyond expected utility theory to incorporate prospect theory parameters such as loss aversion and nonlinear probability weighting. Using the parameters elicited from the experiment, I find that farmers who are more risk averse or more loss averse adopt Bt cotton later. Farmers who overweight small probabilities adopt Bt cotton earlier.
Age-adjusted mortality rates are higher for the unmarried and nonparents than for the married and parents. The effects of marital and parental status on mortality are usually attributed to the positive effects of social integration or social support. The mechanisms by which social support or integration is linked to health outcomes, however, remain largely unexplored. One mechanism may involve health behaviors; the family relationships of marriage and parenting may provide external regulation and facilitate self-regulation of health behaviors which can affect health. The present study employs a national sample to examine the relationships of marital and parenting status to a variety of health behaviors. Results indicate that marriage and presence of children in the home have a deterrent effect on negative health behaviors. It is suggested, within the theoretical framework of social integration, that family roles promote social control of health behaviors which affect subsequent mortality.
This paper investigates gender differences in smoking behavior using data from the German Socio-economic Panel (SOEP). We develop a Blinder-Oaxaca decomposition method for count data models, which allows to isolate the part of the gender differential in the number of cigarettes daily smoked that can be explained by differences in observable characteristics from the part attributable to differences in coefficients. Our results reveal that the major part of the gender smoking differential is attributable to differences in coefficients indicating substantial differences in the smoking behavior between men and women.
The existing literature on marriage and fertility decisions pays little attention to the roles played by risk preferences and uncertainty. However given uncertainty regarding the availability of suitable marriage partners, the ability to contracept, and the ability to conceive, women's risk preferences might be expected to play an important role in marriage and fertility timing decisions. By using data from the Panel Study of Income Dynamics (PSID), I find that measured risk preferences have a significant effect on the timing of both marriage and fertility. Highly risk-tolerant women are more likely to delay marriage, consistent with either a search model of marriage or a risk-pooling explanation. In addition, risk preferences affect fertility timing in a way that differs by marital status and education, and that varies over the life cycle. Greater tolerance for risk leads to earlier births at young ages, consistent with these women being less likely to contracept effectively. In addition, as the subgroup of college-educated, unmarried women nears the end of their fertile periods, highly risk-tolerant women are likely to delay childbearing relative to their more risk-averse counterparts and are therefore less likely to become mothers. These findings may have broader implications for both individual and societal well-being.