ABSTRACT Are Tall People Less Risk Averse than Others? 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 these influences if they are not observable. Not only 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.
JEL Classification: D90, J13, J24
Keywords: height, risk preference
Institute of Empirical Economic Research Leibniz University of Hannover
Königsworther Platz 1 D-30167 Hannover Germany