Intergenerational transfer of time and risk preferences

Heather  Brown; Marjon van der Pol

doi:10.1016/j.joep.2015.06.003

Intergenerational transfer of time and risk preferences

Heather Brown, Marjon van der Pol

Newcastle University

Research output: Contribution to journal › Article › peer-review

34 Citations (Scopus)

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Abstract

There is a growing interest in individual time and risk preferences. Little is known about how these preferences are formed. It is hypothesised that parents may transmit their preferences to their offspring. This paper examines the correlation in offspring and parental time and risk preferences using data from an annual household survey in Australia (the HILDA survey). Both time and risk preferences are examined and we explored whether the correlation in time and risk preferences varies across the distribution of preferences and across the across the four parent–child dyads (mother/daughter, mother/son, father/daughter, father/son). The results show that there is a significant relationship between parents and their young adult offspring risk and time preference measures. The correlation varies across the distribution of time preferences. The correlation was largest for longer planning horizons. Risk averse parents are more likely to have risk averse children. Except for the father/daughter dyad risk seeking parents are more likely to have risk seeking offspring. Some gender differences were found. The association in parental and offspring time preference was larger for mothers than fathers. Daughters are more likely to be influenced by their mother’s risk preferences, however, sons are equally influenced by both parents. The results of this study suggest that the transmission in preferences is more nuanced than previously thought and parental gender may be important.

Original language	English
Pages (from-to)	187-204
Number of pages	18
Journal	Journal of Economic Psychology
Volume	49
Early online date	12 Jun 2015
DOIs	https://doi.org/10.1016/j.joep.2015.06.003
Publication status	Published - Aug 2015

Bibliographical note

Date of Acceptance: 03/06/15

Acknowledgements
The Chief Scientist Office of the Scottish Government Health and Social Care Directorates funds HERU. The views expressed in this paper are those of the authors only and not those of the funding body. HB received financial support from the Medical Research Council/Economic and Social Research Council/National Institute of Health Research under grant G0802291. This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper, however, are those of the author and should not be attributed to either FaHCSIA or the Melbourne Institute.

Keywords

intergenerational transfer
risk preference
time preferences
generalised ordered probit
Australia

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10.1016/j.joep.2015.06.003Licence: CC BY

Intergenerational transfer of time and risk preferences
copyright 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Final published version, 1.25 MBLicence: CC BY

Marjon van der Pol
- School of Medicine, Medical Sciences & Nutrition, Health Economics Research Unit - Chair in Health Economics
- Institute of Applied Health Sciences
Person: Academic

Cite this

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abstract = "There is a growing interest in individual time and risk preferences. Little is known about how these preferences are formed. It is hypothesised that parents may transmit their preferences to their offspring. This paper examines the correlation in offspring and parental time and risk preferences using data from an annual household survey in Australia (the HILDA survey). Both time and risk preferences are examined and we explored whether the correlation in time and risk preferences varies across the distribution of preferences and across the across the four parent–child dyads (mother/daughter, mother/son, father/daughter, father/son). The results show that there is a significant relationship between parents and their young adult offspring risk and time preference measures. The correlation varies across the distribution of time preferences. The correlation was largest for longer planning horizons. Risk averse parents are more likely to have risk averse children. Except for the father/daughter dyad risk seeking parents are more likely to have risk seeking offspring. Some gender differences were found. The association in parental and offspring time preference was larger for mothers than fathers. Daughters are more likely to be influenced by their mother{\textquoteright}s risk preferences, however, sons are equally influenced by both parents. The results of this study suggest that the transmission in preferences is more nuanced than previously thought and parental gender may be important.",

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author = "Heather Brown and {van der Pol}, Marjon",

note = "Date of Acceptance: 03/06/15 Acknowledgements The Chief Scientist Office of the Scottish Government Health and Social Care Directorates funds HERU. The views expressed in this paper are those of the authors only and not those of the funding body. HB received financial support from the Medical Research Council/Economic and Social Research Council/National Institute of Health Research under grant G0802291. This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper, however, are those of the author and should not be attributed to either FaHCSIA or the Melbourne Institute.",

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N2 - There is a growing interest in individual time and risk preferences. Little is known about how these preferences are formed. It is hypothesised that parents may transmit their preferences to their offspring. This paper examines the correlation in offspring and parental time and risk preferences using data from an annual household survey in Australia (the HILDA survey). Both time and risk preferences are examined and we explored whether the correlation in time and risk preferences varies across the distribution of preferences and across the across the four parent–child dyads (mother/daughter, mother/son, father/daughter, father/son). The results show that there is a significant relationship between parents and their young adult offspring risk and time preference measures. The correlation varies across the distribution of time preferences. The correlation was largest for longer planning horizons. Risk averse parents are more likely to have risk averse children. Except for the father/daughter dyad risk seeking parents are more likely to have risk seeking offspring. Some gender differences were found. The association in parental and offspring time preference was larger for mothers than fathers. Daughters are more likely to be influenced by their mother’s risk preferences, however, sons are equally influenced by both parents. The results of this study suggest that the transmission in preferences is more nuanced than previously thought and parental gender may be important.

AB - There is a growing interest in individual time and risk preferences. Little is known about how these preferences are formed. It is hypothesised that parents may transmit their preferences to their offspring. This paper examines the correlation in offspring and parental time and risk preferences using data from an annual household survey in Australia (the HILDA survey). Both time and risk preferences are examined and we explored whether the correlation in time and risk preferences varies across the distribution of preferences and across the across the four parent–child dyads (mother/daughter, mother/son, father/daughter, father/son). The results show that there is a significant relationship between parents and their young adult offspring risk and time preference measures. The correlation varies across the distribution of time preferences. The correlation was largest for longer planning horizons. Risk averse parents are more likely to have risk averse children. Except for the father/daughter dyad risk seeking parents are more likely to have risk seeking offspring. Some gender differences were found. The association in parental and offspring time preference was larger for mothers than fathers. Daughters are more likely to be influenced by their mother’s risk preferences, however, sons are equally influenced by both parents. The results of this study suggest that the transmission in preferences is more nuanced than previously thought and parental gender may be important.

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ER -

Intergenerational transfer of time and risk preferences

Abstract

Bibliographical note

Keywords

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Marjon van der Pol

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