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Loss Aversion and Individual Characteristics

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An Erratum to this article was published on 08 March 2011

Abstract

Many studies have shown that loss aversion affects the valuation of non-market goods. Using stated choice data, this paper presents an empirical investigation of how individual-level loss aversion varies with observable personal characteristics and with the choice context. We investigate loss aversion with respect to travel time and money, and find significant loss aversion in both dimensions. The degree of loss aversion in the time dimension is larger than in the money dimension, and depends on age and education. Subjects tend to be more loss averse when the reference is well established.

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Abbreviations

EG:

Equivalent gain

EL:

Equivalent loss

MRS:

Marginal rate of substitution

WTP:

Willingness-to-pay

WTA:

Willingness-to-accept

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Author information

Authors and Affiliations

  1. Department of Transport, Technical University of Denmark, Bygningstorvet 116 Vest, 2800, Kgs. Lyngby, Denmark

    Katrine Hjorth & Mogens Fosgerau

  2. Department of Economics, University of Copenhagen, Copenhagen, Denmark

    Katrine Hjorth

  3. Centre for Transport Studies, Royal Institute of Technology, Stockholm, Sweden

    Mogens Fosgerau

Authors
  1. Katrine Hjorth
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  2. Mogens Fosgerau
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Corresponding author

Correspondence to Katrine Hjorth.

Additional information

An erratum to this article can be found at http://dx.doi.org/10.1007/s10640-011-9460-3

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Hjorth, K., Fosgerau, M. Loss Aversion and Individual Characteristics. Environ Resource Econ 49, 573–596 (2011). https://doi.org/10.1007/s10640-010-9455-5

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