Individual characteristics associated with risk and time preferences: A multi country representative survey

TL;DR

This study investigates how individual traits like age, gender, income, and cognitive ability influence economic preferences such as risk and time discounting across eight European countries, highlighting methodological considerations.

Contribution

It provides a large-scale, multi-country empirical analysis linking individual characteristics to economic preferences using incentivized surveys and joint parameter estimation.

Findings

Preferences vary with age, gender, and income.

Cognitive ability influences risk and time preferences.

Methodological factors affect preference elicitation results.

Abstract

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.