Risk Aversion at the Country Level
Abstract: This article estimates the coefficient of relative risk aversion for 75 countries using data on self-reports of personal well-being from the 2006 Gallup World Poll. The analysis suggests that the coefficient of relative risk aversion varies closely around 1, which corresponds to a logarithmic utility function. The authors conclude that their results support the use of the log utility function in numerical simulations of economic models.
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Description: Full text
Provider: Federal Reserve Bank of St. Louis
Part of Series: Review
Publication Date: 2015