Risk and Time Preferences Among the Urban Poor in Saudi Arabia

Research output: Contribution to journalArticleResearchpeer review

Authors

  • Miriam Al Lily
  • Sabine Liebenehm

External Research Organisations

  • Prince Mohammad Bin Fahd University (PMU)
  • American University of Bahrain
  • University of Saskatchewan
View graph of relations

Details

Original languageEnglish
Number of pages21
JournalReview of development economics
Early online date16 Dec 2024
Publication statusE-pub ahead of print - 16 Dec 2024

Abstract

This paper investigates behavioral attitudes toward risk and time among the urban poor in Saudi Arabia by conducting an incentivized lab-in-the-field experiment and exploring the correlations between these attitudes and demographic and socioeconomic characteristics that are relevant in the Saudi context. Specifically, the focus of this research is on cultural and religious indicators related to Bedouin heritage and the strength of religious beliefs as well as a set of different proxies for poverty, including income, assets, social welfare payments, and social capital. Accordingly, we define a discounted utility model, where we apply prospect theory and quasihyperbolic discounting. We then jointly estimate participants' risk and time preferences via a maximum likelihood approach. Our results suggest that, on average, poor urban Saudis exhibit high levels of risk aversion and patience; these findings are similar to those reported in other studies that have investigated Muslim respondents in rural settings. We also reveal that stronger religious beliefs are associated with higher levels of risk-taking and a stronger preference for the present, whereas Bedouin heritage and asset-related poverty in terms of home ownership and savings are related to higher levels of risk aversion and impatience.

Keywords

    prospect theory, quasihyperbolic discounting, risk and time preferences, Saudi Arabia

ASJC Scopus subject areas

Cite this

Risk and Time Preferences Among the Urban Poor in Saudi Arabia. / Al Lily, Miriam; Liebenehm, Sabine.
In: Review of development economics, 16.12.2024.

Research output: Contribution to journalArticleResearchpeer review

Al Lily M, Liebenehm S. Risk and Time Preferences Among the Urban Poor in Saudi Arabia. Review of development economics. 2024 Dec 16. Epub 2024 Dec 16. doi: 10.1111/rode.13178
Download
@article{b8ec8954728748719bbed6446767a06d,
title = "Risk and Time Preferences Among the Urban Poor in Saudi Arabia",
abstract = "This paper investigates behavioral attitudes toward risk and time among the urban poor in Saudi Arabia by conducting an incentivized lab-in-the-field experiment and exploring the correlations between these attitudes and demographic and socioeconomic characteristics that are relevant in the Saudi context. Specifically, the focus of this research is on cultural and religious indicators related to Bedouin heritage and the strength of religious beliefs as well as a set of different proxies for poverty, including income, assets, social welfare payments, and social capital. Accordingly, we define a discounted utility model, where we apply prospect theory and quasihyperbolic discounting. We then jointly estimate participants' risk and time preferences via a maximum likelihood approach. Our results suggest that, on average, poor urban Saudis exhibit high levels of risk aversion and patience; these findings are similar to those reported in other studies that have investigated Muslim respondents in rural settings. We also reveal that stronger religious beliefs are associated with higher levels of risk-taking and a stronger preference for the present, whereas Bedouin heritage and asset-related poverty in terms of home ownership and savings are related to higher levels of risk aversion and impatience.",
keywords = "prospect theory, quasihyperbolic discounting, risk and time preferences, Saudi Arabia",
author = "{Al Lily}, Miriam and Sabine Liebenehm",
note = "Publisher Copyright: {\textcopyright} 2024 John Wiley & Sons Ltd.",
year = "2024",
month = dec,
day = "16",
doi = "10.1111/rode.13178",
language = "English",
journal = "Review of development economics",
issn = "1363-6669",
publisher = "Wiley-Blackwell Publishing Ltd",

}

Download

TY - JOUR

T1 - Risk and Time Preferences Among the Urban Poor in Saudi Arabia

AU - Al Lily, Miriam

AU - Liebenehm, Sabine

N1 - Publisher Copyright: © 2024 John Wiley & Sons Ltd.

PY - 2024/12/16

Y1 - 2024/12/16

N2 - This paper investigates behavioral attitudes toward risk and time among the urban poor in Saudi Arabia by conducting an incentivized lab-in-the-field experiment and exploring the correlations between these attitudes and demographic and socioeconomic characteristics that are relevant in the Saudi context. Specifically, the focus of this research is on cultural and religious indicators related to Bedouin heritage and the strength of religious beliefs as well as a set of different proxies for poverty, including income, assets, social welfare payments, and social capital. Accordingly, we define a discounted utility model, where we apply prospect theory and quasihyperbolic discounting. We then jointly estimate participants' risk and time preferences via a maximum likelihood approach. Our results suggest that, on average, poor urban Saudis exhibit high levels of risk aversion and patience; these findings are similar to those reported in other studies that have investigated Muslim respondents in rural settings. We also reveal that stronger religious beliefs are associated with higher levels of risk-taking and a stronger preference for the present, whereas Bedouin heritage and asset-related poverty in terms of home ownership and savings are related to higher levels of risk aversion and impatience.

AB - This paper investigates behavioral attitudes toward risk and time among the urban poor in Saudi Arabia by conducting an incentivized lab-in-the-field experiment and exploring the correlations between these attitudes and demographic and socioeconomic characteristics that are relevant in the Saudi context. Specifically, the focus of this research is on cultural and religious indicators related to Bedouin heritage and the strength of religious beliefs as well as a set of different proxies for poverty, including income, assets, social welfare payments, and social capital. Accordingly, we define a discounted utility model, where we apply prospect theory and quasihyperbolic discounting. We then jointly estimate participants' risk and time preferences via a maximum likelihood approach. Our results suggest that, on average, poor urban Saudis exhibit high levels of risk aversion and patience; these findings are similar to those reported in other studies that have investigated Muslim respondents in rural settings. We also reveal that stronger religious beliefs are associated with higher levels of risk-taking and a stronger preference for the present, whereas Bedouin heritage and asset-related poverty in terms of home ownership and savings are related to higher levels of risk aversion and impatience.

KW - prospect theory

KW - quasihyperbolic discounting

KW - risk and time preferences

KW - Saudi Arabia

UR - http://www.scopus.com/inward/record.url?scp=85212144052&partnerID=8YFLogxK

U2 - 10.1111/rode.13178

DO - 10.1111/rode.13178

M3 - Article

AN - SCOPUS:85212144052

JO - Review of development economics

JF - Review of development economics

SN - 1363-6669

ER -