Risky business: an analysis of teacher risk preferences

Abstract

A range of proposals aim to reform teacher compensation, recruitment, and retention. Teachers have generally not embraced these policies. One potential explanation for their objections is that teachers are relatively risk averse. We examine this hypothesis using a risk-elicitation task common to experimental economics. By comparing preferences of new teachers with those entering other professions, we find that individuals choosing to teach are significantly more risk averse. This suggests that the teaching profession may attract individuals who are less amenable to certain reforms. Policy-makers should take into account teacher risk characteristics when considering reforms that may clash with preferences.

Keywords:

• teacher characteristics
• education
• experimental economics

Notes

1 The only changes in significance that take place are in 2 of the 12 analyses. The coefficient for MAT is always positive and statistically significant at conventional levels in 10 of these 12 analyses and always for models 1, 2, and 3. However, when removing participants who did not initially get the initial item check correct, the coefficient on MAT is 0.90 (p = 0.11) in the fourth model when controlling for the number of times that a participant eats out in a given week (wealth proxy 2). When removing any participant who demonstrated confusion in terms of switching options more than once, the coefficient on MAT is 0.91 (p = 0.12) in the third model when controlling for the number of times that a participant eats out in a given week.