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Experimental Evidence on Socioeconomic Differences in Risk‐Taking and Risk Premiums
Author(s) -
Li Zheng
Publication year - 2020
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/1475-4932.12544
Subject(s) - socioeconomic status , logit , logistic regression , willingness to pay , mixed logit , risk seeking , economics , econometrics , demographic economics , actuarial science , environmental health , statistics , microeconomics , medicine , mathematics , finance , population
Using a route choice experiment with embedded travel time variability, this study empirically estimates car commuters’ risk attitudes and taste preferences within a nonlinear mixed logit model. In addition to the identified overall risk‐taking behaviour, we find that risk attitudes covary with some sociodemographic characteristics, that is, older commuters are more risk‐taking than young ones and higher‐income commuters are less risk‐taking than low‐income ones. The implications of accounting for systematic risk attitude heterogeneity for valuing travellers’ willingness to pay for travel time improvement are also discussed.