Publication type
Journal Article
Authors
Publication date
December 15, 2013
Summary:
In this paper we provide estimates of the coefficient of relative risk aversion using information on self-reports of subjective personal well-being from multiple datasets, including three cross-sectional surveys and two panel surveys, namely the Gallup World Poll, the European Social Survey, the World Values Survey, the British Household Panel Survey for the United Kingdom, and the General Social Survey for the United States. We additionally consider the implications of allowing for health-state dependence in the utility function on the estimates of risk aversion and examine how the marginal utility of income changes in poor health states. Our estimates of relative risk aversion with cross-section data vary closely around 1, which corresponds to logarithmic utility, while the estimates with panel data are slightly larger. We find that controlling for health dependence generally reduces these estimates. In contrast with other studies in the literature, our results also suggest that the marginal utility of income increases when satisfaction with health deteriorates, and this effect is robust across the various datasets analyzed. 2013 Elsevier B.V. All rights reserved.
Published in
Journal of Economic Psychology
Volume and page numbers
Volume: 39 , p.301 -312
DOI
http://dx.doi.org/10.1016/j.joep.2013.09.005
ISSN
1674870
Subjects
Notes
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