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The intergenerational transmission of risk and trust attitudes

Author

Listed:
  • Dohmen, Thomas J.
  • Falk, Armin
  • Huffman, David
  • Sunde, Uwe
Abstract
Recent theories endogenize the attitude endowments of individuals, assuming that they are shaped by the attitudes of parents and other role models. This paper tests empirically for the relevance of three aspects of the attitude transmission process highlighted in this theoretical literature: (1) transmission of attitudes from parents to children; (2) an impact of prevailing attitudes in the local environment on child attitudes; and (3) positive assortative mating of parents, which enhances the ability of a parent to pass on his or her attitudes to the child. We focus on two fundamentally important attitudes, willingness to take risks and willingness to trust others. We find empirical support for all three aspects, providing an empirical underpinning for the literature. An investigation of underlying mechanisms shows that socialization is important in the transmission process. Various parental characteristics and aspects of family structure are found to strengthen the socialization process, with implications for modeling the socialization production function and for policies focused on affecting children’s non-cognitive skills. The paper also provides evidence that the transmission of risk and trust attitudes affects a wide variety of child outcomes, implying a potentially large total effect on children’s economic situation.

Suggested Citation

  • Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe, 2012. "The intergenerational transmission of risk and trust attitudes," Munich Reprints in Economics 20051, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20051
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    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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