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Forschungsprojekte - Dien Pham

Measuring individual risk attitude and the role of risk attitudes in rural households' socioeconomic welfare in Vietnam

The attitude towards risks plays a crucial role in human decision-making. It has important implications for economic decisions and long-term consequences in welfare. There is a concern, that the poor people in developing might be too risk-averse. Therefore, they tend to avoid risky investment opportunities and are reluctant to adopt new technologies or to trade in a new market. This can be attributed to the fact that the poor individuals can hardly afford to take risks in the adverse states of the world. However, current literature endeavours to find a consensus on an effective risk attitude measure which powerfully explains real world risk behaviours and decision-making.

This project assesses the association between the two prominent measures of individual risk attitude, particularly, experimental measure and the surveyed-based measure. This project will also address the heterogeneities of individual risk attitudes to emphasize the linkage between risk attitudes and the variations in social and economic behaviours and outcomes. The rural households in Dak Lak and Hue provinces of Vietnam provide an ethnically diverse population, in which, the ethnic minorities are believed to be economically disadvantaged and strongly influenced by their own traditions deviating from the “homo oeconomicus” assumption. As a result, we expect to provide further understanding of the role of risk attitude in poverty reduction and socioeconomic inequality among a diverse population.

Objectives

1. To experimentally validate the survey-based measure of general risk attitude among different ethnic groups

2. To analyze the role of risk attitude on management decisions in agriculture

3. To understand the relationship between risk attitudes and households’ economic welfare among different ethnic groups

4. To examine the self-assessed measures in revealing farmers’ risk attitude and social preferences (how well they are correlated) 

Data

Cross-sectional and panel data from DFG FOR 756 project and follow-up project 'Individual risk attitudes in rural Thailand and Vietnam'

Methodology

Quantitative and qualitative analyses using both cross-sectional and panel data models