Abstract
Spousal correlation in risk attitude is estimated using data from the German Socio-Economic Panel over the period 2004–2009. We apply the bivariate panel
ordered probit model to the analysis of the simultaneous determination of the male’s and the female’s risk attitude, using the survey question about general willingness to take risk, provided on a 0–10 Likert-scale. The correlations between both the individual-specific effects of the two partners and the two within-individual errors are separately estimated, and found to be +0.285 and +0.310, respectively. We consider the former to be a key parameter, since its positive sign may be interpreted in terms of positive assortative mating on risk attitude: individuals tend to form partnerships with others having a similar risk attitude. We also find evidence that this correlation increases with years of marriage, suggesting either a form of spousal socialization or a selection process in which marriage breakdown is more likely in poorly matched couples.
ordered probit model to the analysis of the simultaneous determination of the male’s and the female’s risk attitude, using the survey question about general willingness to take risk, provided on a 0–10 Likert-scale. The correlations between both the individual-specific effects of the two partners and the two within-individual errors are separately estimated, and found to be +0.285 and +0.310, respectively. We consider the former to be a key parameter, since its positive sign may be interpreted in terms of positive assortative mating on risk attitude: individuals tend to form partnerships with others having a similar risk attitude. We also find evidence that this correlation increases with years of marriage, suggesting either a form of spousal socialization or a selection process in which marriage breakdown is more likely in poorly matched couples.
| Original language | English |
|---|---|
| Pages (from-to) | 389-401 |
| Number of pages | 13 |
| Journal | Theory and Decision |
| Volume | 77 |
| Issue number | 3 |
| Early online date | 12 Jul 2014 |
| DOIs | |
| Publication status | Published - Oct 2014 |
Keywords
- Multiple equation models
- Ordinal data
- Panel data
- Risk attitude
- Assortative mating
- Spousal correlation
- Homophily
Profiles
-
Peter Moffatt
- School of Economics - Professor of Econometrics
- Norwich Institute for Healthy Aging - Member
- Centre for Behavioural and Experimental Social Science - Member
- Applied Econometrics And Finance - Member
- Behavioural Economics - Member
Person: Research Group Member, Research Centre Member, Academic, Teaching & Research