The Intergenerational Transmission of Risk Preferences : Evidence from Field Experiments in China and Korea

In East Asian countries, and especially in China and South Korea, parents have a significant influence on their children’s decisions. This study explores factors that affect the similarity of risk preferences between parents and their children. We conduct a field experiment with 196 worker-parent pairs from two companies in China and South Korea and find the existence of intergenerational transmission of risk preferences. More specifically, in the Chinese data, we show more similar risk preferences between parents and children when there are higher levels of parental involvement and financial parenting. In contrast, in the Korean data, a more demanding parenting style contributes to intergenerational transmission. These effects are mainly captured by the intergenerational transmission between Chinese mothers and their children and between Korean fathers and their children. We also explain the differences in intergenerational transmission between East Asian Countries and Western countries. This study provides a better understanding of the formation of individuals’ risk preferences