A New Method of Estimating Risk Aversion

American Economic Review - Tập 96 Số 5 - Trang 1821-1834 - 2006
Raj Chetty1
1Department of Economics, University of California, Berkeley, 549 Evans Hall #3880, Berkeley, CA 94709, and National Bureau of Economic Research.

Tóm tắt

I show existing evidence on labor supply behavior places an upper bound on risk aversion in the expected utility model. I derive a formula for the coefficient of relative risk aversion (γ) in terms of the ratio of the income elasticity of labor supply to wage elasticity and degree of complementarity between consumption and labor. I bound the degree of complementarity using data on consumption choices when labor supply varies across states. Using labor supply elasticity estimates, I find a mean estimate of [Formula: see text], then show generating γ > 2 requires that wage increases cause sharper labor supply reductions.

Từ khóa


Tài liệu tham khảo

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Thông tin
Thông tin xuất bản

American Economic Review

Tập 96 Số 5

1821-1834

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