Economic preferences across generations and family clusters

A new GLO Discussion Paper using data from Bangladesh finds that both mothers’ and fathers’ risk, time and social preferences are significantly (and largely to the same degree) positively correlated with their children’s economic preferences. Families cluster in those with either relatively patient, risk-tolerant and pro-social members or in families with relatively impatient, risk averse and spiteful members.

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GLO Discussion Paper No. 592, 2020

Economic preferences across generations and family clusters: A large-scale experiment – Download PDF
by Chowdhury, Shyamal & Sutter, Matthias & Zimmermann, Klaus F.

GLO Fellows Shyamal Chowdhury, Matthias Sutter & Klaus F. Zimmermann

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Author Abstract: Economic preferences are important for lifetime outcomes such as educational achievements, health status, or labor market success. We present a holistic view of how economic preferences are related within families. In an experiment with 544 families (and 1,999 individuals) from rural Bangladesh we find a large degree of intergenerational persistence of economic preferences. Both mothers’ and fathers’ risk, time and social preferences are significantly (and largely to the same degree) positively correlated with their children’s economic preferences, even when controlling for personality traits and socio-economic background data. We discuss possible transmission channels for these relationships within families and find indications that there is more than pure genetics at work. Moving beyond an individual level analysis, we are the first to classify a whole family into one of two clusters, with either relatively patient, risk-tolerant and pro-social members or relatively impatient, risk averse and spiteful members. Socio-economic background variables correlate with the cluster to which a family belongs to.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS,  EconPapers). Complete list of all GLO DPs – downloadable for free.

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