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Are Tall People Less Risk Averse Than Others?
Journal of Contextual Economics – Schmollers Jahrbuch, Vol. 133 (2013), Iss. 1 : pp. 23–42
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Olaf Hübler, Leibnitz Universität Hannover, Institut für Empirische Wirtschaftsforschung, Königsworther Platz 1, D-30167 Hannover, Germany.
Abstract
This paper examines the question of whether risk aversion of prime-age workers is negatively correlated with human height to a statistically significant degree. A variety of estimation methods, tests and specifications yield robust results that permit one to answer this question in the affirmative. Hausman-Taylor panel estimates, however, reveal that height effects disappear if personality traits and skills, parents' behaviour, and interactions between environment and individual abilities appear simultaneously. Height is a good proxy for all these influences if they are not observable. Not just one factor but a combination of several traits and interaction effects can describe the time-invariant individual effect in a panel model of risk attitude.