The Impact of Violence on Individual Risk Preferences: Evidence from a Natural Experiment
Published in Review of Economics and Statistics, 2019
Abstract
We estimate the impact of Kenya’s post-election violence on individual risk preferences. Because the crisis interrupted a longitudinal survey of more than five thousand Kenyan youth, this timing creates plausibly exogenous variation in exposure to civil conflict by the time of the survey. We measure individual risk preferences using hypothetical lottery choice questions which we validate by showing that they predict migration and entrepreneurship in the cross-section. Our results indicate that the post-election violence sharply increased individual risk aversion. Findings remain robust when we use an IV estimation strategy that exploits random assignment of respondents to waves of surveying.
Other versions
Link to published paper in Review of Economics and Statistics
Pre-print 2018 manuscript (pdf)
Revised April 2016 as IZA Discussion Paper 9870
Earlier version appears as World Bank WPS 7440, October 2015; also appears as Households in Conflict Network working paper 204; also available from SSRN.)
Data
Data and analysis files: (hosted at Harvard Dataverse)
Media
Podcast: 20-minute interview on Four Questions by Alice Evans, March 2018
Other information
JEL codes: C91, C93, D01, D74, D81
Recommended citation: Jakiela, Pamela, and Owen Ozier. "The impact of violence on individual risk preferences: evidence from a natural experiment." Review of Economics and Statistics 101, no. 3 (2019): 547-559.