Are Risk Preferences Stable?
Overview
Paper Summary
The paper reviews evidence on the stability of risk preferences and concludes they are moderately stable, though not perfectly so. Risk preferences change somewhat with age, are influenced by major life events, and can fluctuate temporarily due to factors like stress or emotions. The authors propose a framework for understanding risk preference stability inspired by personality psychology, emphasizing distributional and rank-order stability rather than fixed individual values over time.
Explain Like I'm Five
This paper explores if people's attitudes towards risk change over time. It finds some changes with age and during big events like financial crises, but how much risk someone takes also depends on personality and other factors.
Possible Conflicts of Interest
None identified
Identified Limitations
Rating Explanation
This paper offers a comprehensive review of the existing literature on risk preference stability, synthesizing findings from diverse strands of research. It proposes a new conceptual framework for understanding risk preference stability, drawing insights from personality psychology, which is a valuable contribution. However, the lack of original empirical data and testable hypotheses limits the rating to a 4. The policy implications discussed are also somewhat general.
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