Power Of God & Level Of Risk: The impact of religiosity on individual’s risk preferences

Description

Abstract:

This research paper examines the impact of religiosity on individual’s risk preferences. The expectation is that higher level of religiosity will lead to less risk averse behaviors (more risk loving). Using religious practice, religious belief and spirituality to measure religiosity, and a lottery task to measure risk aversion, quantitative data are collected from 1000 Norwegian individuals. The paper observed that religious practice and spirituality have a positive relationship with risk aversion. Religious belief has a negative relationship with risk aversion. However, the results are not significant and the expectation is not supported. After splitting the sample into different subsample, significant results are observed. For young individuals, religious practice responds negatively on risk aversion, and religious belief responds positively. For female individuals, a negative relationship between religious belief and risk aversion is observed. Holding all else equal, spirituality has a positive relationship with risk aversion.