Do actions speak louder than words? Comparing the effect of risk aversion on objective and self-reported mitigation measures

Abstract

Risky behaviors are of public concern when they are associated with negative externalities. Public programs and policy seek to incentivize less risky behaviors in an effort to reduce or eliminate such social costs. It is in this context that the relationship between risk aversion and risky behaviors is of particular interest. However, the literature on risk aversion and risky behaviors has largely relied on self-reported behaviors. Whether intentional or unintentional, self-reported behaviors may differ from objective measures of behavior. Because policies and programs are often based on objective measures of behavior, rather than self-reports, we ask the question of whether observed relationships between risk preferences and self-reported behaviors extend to objective measures of behavior.