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Individual risk attitudes in rural Thailand and Vietnam

DFG follow-up project 2014 and 2015

This project aims to contribute to a better understanding of the role of individual risk attitudes for explaining the behavior of poor people in developing countries by means of empirical studies. Four measures of risk attitude – two survey items and two experiments – will be carried out in the provinces of Ubon Ratchathani, Thailand and Hue, Vietnam. The novelty of the research is that we combine information about individual risk attitude with information from, first, a detailed panel survey of more than 1500 households and, second, a set of knowledge questions, cognitive ability tests and decision games in the field of finance and agricultural management. This allows us to examine four under-researched issues: (1) to validate various measures of individual risk attitude in the cross-section; (2) to generate understanding about the determinants of risk attitude and behavior in the time-series, in particular by considering the history of shocks; (3) to analyze the influence of financial literacy on risk attitude and behavior; (4) to analyze the role of risk attitude on management decisions in agriculture. The results will form the basis towards formulating more effective strategies to improve poor people’s knowledge and capabilities in finance and agriculture.