The Yeoman's Portfolio: Measuring Risk Preferences Historically using Crop Choice (with Daniela Vidart)
New!
We design a new method for measuring the risk preferences of agents in the past using data on agricultural production decisions. Using our method, we estimate risk preferences in 93% of contiguous U.S. counties decennially from 1890 to 1920. Our results reveal substantial cross-sectional heterogeneity in preferences centered at risk neutrality, and temporal variation in response to aggregate shocks. We show that measured risk aversion is negatively correlated with financial risk-taking within and outside the agricultural context, is representative of the underlying household preference distribution, and that individuals in counties with higher exposure to the American frontier were more risk-taking.
`Nobody Wants to Work Anymore': Lifetime Wage Experiences and the Decline of Male LFP in the United States (with Daniela Vidart)
Submitted
US male labor force participation (MLFP) has declined sharply over the past 50 years. We show that a key driver of this decline is changes in men's beliefs about the returns to work, shaped by lifetime exposure to aggregate male wages. Using PSID data and state-level wage series, we find that MLFP rises with the average male wage in a man's birth state over his life. A one SD increase raises participation by 10pp. Effects persist for migrants and are stronger within race. Our findings suggest lifetime wage experiences shape beliefs, generating long-term spillovers from labor demand to labor supply.
The Global Impacts of Climate Change on Risk Preferences (with Wesley Howden and Meng Song)
Undergoing Major Rewrite
We study the direct impacts that long-run experiences of climate change have on individual risk preferences. Using panel surveys from Indonesia and Mexico (total N = 25,000), we link within-person changes in elicited risk preferences to state-level, lifetime experiences of climate change. In line with the predictions of a Bayesian model of learning over background climate risk, we find that in both settings increases in the experienced means of temperature and precipitation cause significant decreases in measured risk aversion, while increases in the experienced variance of temperature in Indonesia and the variance of precipitation in Mexico lead to significant increases in measured risk aversion. We replicate this analysis globally using a survey with a representative sample from 75 countries (N = 75,000) containing an elicited measure of risk preference which we link to country-level, lifetime climate experiences. We find significant results for both the means and variances of both climate variables that are consistent with our panel analyses. Across all settings, experiences of climate variance have first-order effects, with coefficient magnitudes of the standard deviation of climate 0.6-2.6 times that of the climate mean. We develop a novel method for estimating the welfare effects of observed risk preference changes using panel data, and find that the climate-induced changes in risk preferences we observe increased welfare in both Indonesia and Mexico by approximately 1%.
Risk-Taking Adaptation to Macroeconomic Experiences (with Daniela Vidart)
Accepted, Journal of Political Economy Microeconomics
We study how lifetime experiences of macroeconomic volatility shape individual risk attitudes. We build a Bayesian model where risk aversion endogenously adapts to agents' beliefs about an exogenous income process. We combine panel data from Indonesia and Mexico containing elicited measures of risk aversion with state-level real GDP growth time series capturing individuals' lifetime macroeconomic experiences. Consistent with the model's predictions, we find that measured risk aversion increases with macroeconomic volatility, and this is a first-order driver of risk attitudes. These results are robust to many alternate specifications and controls and extend to risk-taking behavior in other domains.
James H. Fowler, Seth J. Hill, Remy Levin, Nick Obradovich. Stay-at-home orders associate with subsequent decreases in COVID-19 cases and fatalities in the United States. PLOS One, 2021
Richard Karlsson Linner, Pietro Biroli, Edward Kong,..., Remy Z. Levin,..., Daniel J. Benjamin, Philipp D Koellinger, Jonathan P. Beauchamp. Genome-wide association analyses of risk tolerance and risky behaviors in over 1 million individuals identify hundreds of loci and shared genetic influences. Nature Genetics, 2019.
Levin, Remy Z., and Chen, Paul. Rethinking the Constitution-Treaty Relationship. International Journal of Constitutional Law, 10(1), 242-260, 2012.
A Theory of Boundedly Rational Learning in Complex Environments
Risk Preference Adaptation Theory
Pricing Risk in the Fog of War
Dimension, Hutchinson Operators, and Self-Similarity: Fundamental Concepts in Fractal Geometry (Senior Thesis, submitted as condition for graduation with distinction in Mathematics, WWU 2013)