Friday, May 4, 2012

Being tall and risk aversion

Are tall people less risk-averse than others? That seems like an odd question to ask. In particular, what would one want to do with the answer? Well, if the answer is no, this can help in establishing better insurance policies. Also, if some policies influence height, it is good to know what taller people entails (besides the known higher income and confidence).

Olaf Hübler finds that, yes, tall people are less risk averse. What is more interesting is that this result disappears once you factor in other variables, like personality, skills, and information about parental behavior. That is particularly interesting because such information is often not readily available, whereas height can be easier to find and used as a proxy. So, not such an odd question after all. Another question is then why would there be such a relationship.

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