[Research Seminar] IRISK: “An experimental investigation of social risk preferences for health” O. L’HARIDON – Université de Rennes

Speaker: Olivier L’HARIDON
Université de Rennes

Co-authors: A. ATTEMA and G. VAN DE KUILEN

Date and Location – Tuesday June 7th 2022 from 16:30 to 17:30 in A022 (Lille campus) and on Zoom

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ABSTRACT

A growing body of literature has demonstrated the relevance and impact of higher-order risk preferences for savings decisions, auctions, bargaining and individual medical decision making. This paper measures higher-order risk preferences in a social setting when the decision-maker acts as a benevolent planner. In addition to eliciting higher-order risk preferences with the risk-apportionment method, we also measure attitudes towards ex-ante inequality within the same framework. We found evidence favouring risk aversion in social lotteries but much lower evidence for higher-order risk preferences such as prudence. We also found evidence for aversion to ex-ante inequality, and such evidence was more common than the aversion towards ex-post inequality revealed by the measure of correlation aversion. While predominant, aversion to inequality was almost unrelated to higher-order risk preferences (risk aversion, prudence, correlation aversion, cross-prudence and cross-temperance). Our experiment also included the choice of different health policies, for which the participants faced unequal -and possibly risky- distributions between groups in terms of longevity. Our results show how the presence -or absence- of social risk can impact the support for health-policy choices.