Risk Preferences and the Decision to Flee Conflict
Despite the growing numbers of forcibly displaced persons worldwide, many people living under conflict choose not to flee. Individuals face two lotteries -- staying or leaving -- characterized by two distributions of potential outcomes. This paper...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/111191522076481536/Risk-preferences-and-the-decision-to-flee-conflict http://hdl.handle.net/10986/29556 |
| Summary: | Despite the growing numbers of forcibly
displaced persons worldwide, many people living under
conflict choose not to flee. Individuals face two lotteries
-- staying or leaving -- characterized by two distributions
of potential outcomes. This paper proposes to model the
choice between these two lotteries using quantile
maximization as opposed to expected utility theory. The
paper posits that risk-averse individuals aim at minimizing
losses by choosing the lottery with the best outcome at the
lower end of the distribution, whereas risk-tolerant
individuals aim at maximizing gains by choosing the lottery
with the best outcome at the higher end of the distribution.
Using a rich set of household and conflict panel data from
Nigeria, the paper finds that risk-tolerant individuals have
a significant preference for staying and risk-averse
individuals have a significant preference for fleeing, in
line with the predictions of the quantile maximization
model. These findings are contrary to findings on economic
migrants, and call for separate policies toward economic and
forced migrants. |
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