Risk taking with social consequences

Clist, Paul, D'Exelle, Ben and Verschoor, Arjan (2025) Risk taking with social consequences. Journal of Development Studies. ISSN 0022-0388

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Abstract

Strong egalitarian norms and preferences may affect entrepreneurship. If people feel guilty of their success they may take fewer risks, whilst if they expect their successes to be celebrated, they would take more risks. In this paper we ask whether anticipated social consequences influence risky choices. Do people take more, less or the same risk when inequality results from risky choice? We provide experimental evidence from rural Uganda. Subjects choose lotteries for themselves and a partner under different risk resolutions, allowing us to identify their type. We find anticipated social consequences influence risk taking for most people, as only one quarter are indifferent. Two-fifths are ex post inequality seeking, holding their own pay off constant, and take more risk when inequality is common. This possibility is not considered by previous experiments in the West, but is the largest category for our sample. Only one-third are ex-post inequality averse, reducing inequality of outcomes at a cost to their expected earnings. We show types are robust, and document large gender-based heterogeneity. These results imply inequality-aversion is not holding back risk taking on average. Rather there is great heterogeneity in how people respond to anticipated social consequences.

Item Type:	Article
Additional Information:	Code availability: The data and code are available here https://doi.org/10.7910/DVN/MN2BMQ and https://paulclist.github.io/. Funding information: The research was funded by ESRC-DFID grant ES/J008893/1.
Uncontrolled Keywords:	risk preferences,efficiency,inequality aversion,outcome fairness,process fairness,social preferences,development ,/dk/atira/pure/subjectarea/asjc/3300/3303
Faculty \ School:	Faculty of Social Sciences > School of Global Development (formerly School of International Development)
UEA Research Groups:	Faculty of Social Sciences > Research Centres > Centre for Behavioural and Experimental Social Sciences Faculty of Social Sciences > Research Groups > Behavioural and Experimental Development Economics Faculty of Social Sciences > Research Groups > Impact Evaluation Faculty of Social Sciences > Research Groups > Gender and Development University of East Anglia Schools > Faculty of Science > Tyndall Centre for Climate Change Research Faculty of Science > Research Centres > Tyndall Centre for Climate Change Research Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict Faculty of Social Sciences > Research Groups > Behavioural Economics
Related URLs:	http://www.scopus.com/inward/record.url?...
Depositing User:	LivePure Connector
Date Deposited:	11 Jan 2025 01:03
Last Modified:	11 Feb 2025 10:30
URI:	https://ueaeprints.uea.ac.uk/id/eprint/98174
DOI:	10.1080/00220388.2025.2453523

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