Attitudes Towards Large Income Risk in Welfare States: An International Comparison
Fred Schroyen summarised his research with Karl Ove Aarbu (Tryg Insurance) published in Economica.
Fred Schroyen summarised his research with Karl Ove Aarbu (Tryg Insurance) on attitudes towards large income risk and the relation to the size of the welfare state in the Norwegian financial paper Dagens Næringsliv.
A welfare state insulates its citizens from background risks in the form of labour market shocks and health shocks. If people that are exposed to larger background risk become less willing to accept new risks—a property coined risk vulnerability—then citizens in welfare states with more generous insurance against unemployment, sick leave or health expenditures and/or with lower incidence of such risks would tend to be less risk averse. Empirical evidence suggests this is the case.