Educational attainment and risk aversion: evidence from rural Uganda

Abstract

Purpose This paper examines whether educational attainment correlates with risk aversion among rural households in Uganda. Design/methodology/approach Unique large-scale field experimental data on risk aversion is used and complemented with household survey data. In the analysis, the study uses the ordinary least square method. Findings The study finds a positive, albeit not robust, correlation between educational attainment and risk aversion. The results suggest that in some contexts, education may reduce risk-taking behaviour. The study also finds that compared to other age groups, the correlation between years of schooling and risk aversion is positive and statistically significant in the subsample of those aged 60 and above. This suggests that the effects of education on risk aversion may differ across age groups. Originality/value This is the first study in Sub-Saharan Africa (SSA) linking educational attainment and risk aversion. Empirical studies that use experimentally elicited risk aversion parameters to examine the influence of educational attainment on risk aversion are nonexistent in SSA. Understanding whether education influences risk aversion in SSA is of policy relevance because individuals, on average, are said to be more risk averse. Risk aversion may aggravate poverty in the region by inducing sub-optimal risk-averse behaviours. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0989

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