Risk preferences and sibling sex composition

ABSTRACT

This article presents evidence on the malleability of preferences over monetary risk of men and women in the context of the family. I focus on sibling sex composition by estimating the causal effect of having a younger brother compared to a sister on the risk attitudes of the first-born child. Results show that women with a younger brother are significantly less risk averse than women with younger sisters. The effect wears off as the age difference increases. The sex of the second-born has a similar but smaller effect on men’s preferences, however, the effect is not statistically significant. The findings provide new causal evidence on how risk preferences are shaped by social environmental factors.

KEYWORDS:

• Risk aversion
• uncertainty
• family
• sibling

JEL CLASSIFICATION:

• J16
• J13
• D8

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ See Appendix A for more information on the DLSY.

² 1 EUR $\approx$ 7.5 DKK.

³ Analyses using the untransformed measure can be found in Table B.1.

⁴ Question: ‘Do you see yourself as a person who is willing to take risks in order to achieve something in life, or do you see yourself as somebody who prefers to avoid risk?’

⁵ 1 EUR $\approx$ 7.5 DKK.