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First Quarter 2015, 
Vol. 97, No. 1
Posted 2015-03-20

Risk Aversion at the Country Level

by Néstor Gándelman and Rubén Hernández-Murillo

This article estimates the coefficient of relative risk aversion for 75 countries using data on self-reports of personal well-being from the 2006 Gallup World Poll. The analysis suggests that the coefficient of relative risk aversion varies closely around 1, which corresponds to a logarithmic utility function. The authors conclude that their results support the use of the log utility function in numerical simulations of economic models.