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The fear of violent conflict causes people to take fewer risks, which can affect the betterment of their lives and the improvement of the economy.
In the first study of its kind, researchers at the University of Colorado Denver used longitudinal survey data taken before and after the start of the Mexican drug war to find a causal link between fear of violence and its impact on attitudes to risk. people living in the affected communities.
Previous research on risk preferences was based on data collected only after a violent event, and revealed that unsafe environments made residents more tolerant of risk or had no effect.
But this new study entitled "The Impact of Violent Crimes on Risk Aversion: Evidence of the Drug War in Mexico", published in the Review of the economy and statistics, found the opposite is true. Also using the data collected prior to the rise in crime, it was found that fear had a profound effect on residents, leading them to express more cautious attitudes towards risk. This change could have a widespread and lasting impact on the economy, because risk tolerance is badociated with the opening of a business, investment in education and in the business. migration to greater opportunities.
"We wondered whether risk attitudes determined the environment in which a person lives or whether the environment determines their attitudes to risk," Ryan said. Brown, badistant professor of economics at the College of Liberal Arts and Sciences CU Denver. "When we only look at people after an event, some left, others stop answering their door or do not answer your survey.It was our chance to study people before and after an event that surprised everyone, if you do not look through time to see the big picture, you'll miss a lot of that. "
Brown and his team found the complete picture in the Mexican Family Life Survey, a longitudinal survey of more than 35,000 people living in more than 8,400 households in 16 states of the country. The first survey, conducted in 2002, aimed to determine the evolution of people's economic behavior over time. To badess attitudes to risk, the survey asked respondents to choose between hypothetical bets with different spin-offs, with options offering higher expected returns also being riskier.
The first follow-up took place from 2005 to 2006, at a time when violent crime was relatively stable. The second follow-up occurred after a major escalation of violence, from 2009 to 2012, shortly after President Felipe Calderón declared war on drugs in 2006. The policy change divided the cartels and the rates of violence. homicides have soared. As a result, some communities that have never been exposed to drug-related violence have been submerged.
The researchers found that an increase in one homicide per 10,000 people increased the probability of being in the category of the longitudinal study with the least risk aversion by 5%. In a unique way, the researchers showed that this relationship was mainly caused by an increase in feelings of fear.
"We understood why living in an unsafe environment would change your risk preferences, but until now we did not know the mechanisms behind it," Brown said. "This study allows us to exclude the political mechanism, and improving access to health care, the economic environment or mental health will make a difference.
Instead, we end up with a much more difficult question: how to solve the fear? "
Explore further:
Teenagers who self-harm are more likely to commit violent crimes
More information:
Ryan Brown et al., Impact of violent crime on risk aversion: evidence from the drug war in Mexico, The magazine of the economy and statistics (2018). DOI: 10.1162 / rest_a_00788
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