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Source: Department of Economics, Iowa State University

Resulting in 3 citations.

1.	Cho, In Soo Orazem, Peter
1.	Risk Aversion or Risk Management?: How Measures of Risk Aversion Affect Firm Entry and Firm Survival Working Paper No. 11016, Department of Economics, Iowa State University, August 2011 Cohort(s): NLSY79 Publisher: Department of Economics, Iowa State University Keyword(s): Attitudes; Cognitive Ability; Earnings; Entrepreneurship; Firms; Occupations; Risk Perception; Risk-Taking; Self-Employed Workers Permission to reprint the abstract has not been received from the publisher. The link between measured risk aversion and the decision to become an entrepreneur is well established, but the link between risk preferences and entrepreneurial success is not. Standard theoretical models of occupational choice under uncertainty imply a positive correlation between an individual’s degree of risk aversion and the expected return from an entrepreneurial venture at the time of entry. Because the expected return is the risk neutral equivalent value, a higher expected return implies a higher survival probability, and so more risk averse entrepreneurs should survive more frequently than their less risk averse counterparts. We test that prediction using successive entry cohorts of young entrepreneurs in the National Longitudinal Survey of Youth 1979 (NLSY79). The empirical results soundly reject the prediction: the most successful entrepreneurs are the least risk averse. This surprising finding calls into question the interpretation of common measures of risk aversion as measures of taste for risk. Instead, measured risk attitudes perform as if they are indicators of entrepreneurial ability– the least risk averse are apparently those who can best assess and manage risks. Indeed, our interpretation is consistent with the work of recent experimental studies that find that the less risk averse have higher cognitive ability.
	Bibliography Citation Cho, In Soo and Peter Orazem. "Risk Aversion or Risk Management?: How Measures of Risk Aversion Affect Firm Entry and Firm Survival." Working Paper No. 11016, Department of Economics, Iowa State University, August 2011.

2.	Koop, Gary Tobias, Justin L.
2.	Semiparametric Bayesian Inference in Smooth Coefficient Models Staff General Research Papers 12202, Department of Economics, Iowa State University, July 2004. Also: http://www.econ.iastate.edu/faculty/tobias/documents/smoothrev2.pdf Cohort(s): NLSY79 Publisher: Department of Economics, Iowa State University Keyword(s): Bayesian; Cognitive Ability; Educational Returns; Labor Supply; Modeling; Schooling; Variables, Independent - Covariate Permission to reprint the abstract has not been received from the publisher. We describe procedures for Bayesian estimation and testing in cross sectional, panel data and nonlinear smooth coefficient models. The smooth coefficient model is a generalization of the partially linear or additive model wherein coefficients on linear explanatory variables are treated as unknown functions of an observable covariate. In the approach we describe, points on the regression lines are regarded as unknown parameters and priors are placed on differences between adjacent points to introduce the potential for smoothing the curves. The algorithms we describe are quite simple to implement - for example, estimation, testing and smoothing parameter selection can be carried out analytically in the cross-sectional smooth coefficient model. We apply our methods using data from the National Longitudinal Survey of Youth (NLSY). Using the NLSY data we first explore the relationship between ability and log wages and flexibly model how returns to schooling vary with measured cognitive ability. We also examine model of female labor supply and use this example to illustrate how the described techniques can been applied in nonlinear settings.
	Bibliography Citation Koop, Gary and Justin L. Tobias. "Semiparametric Bayesian Inference in Smooth Coefficient Models." Staff General Research Papers 12202, Department of Economics, Iowa State University, July 2004.

3.	Kumazawa, Risa
3.	Effects of Heterogeneity in Marital Status on Welfare Participation Working Paper, Department of Economics, Illinois Wesleyan University, Bloomington, IL, April 2003 Cohort(s): NLSY79 Publisher: Department of Economics, Illinois Wesleyan University Keyword(s): Ethnic Studies; Geocoded Data; Heterogeneity; Marital Status; Modeling, Hazard/Event History/Survival/Duration; Modeling, Probit; Racial Studies; Welfare Permission to reprint the abstract has not been received from the publisher. This paper investigates the heterogeneity of unmarried mothers who participate on welfare, which is predicted to be correlated with the welfare generosity of the states of residence. Two econometric methods for dealing with heterogeneity are introduced. The first uses observed marital status variables while the second uses predicted hazard rates of marriage from the Cox proportional hazard model constructed from marital histories of the women. The pooled probit welfare participation regressions use these measures of heterogeneity in marital status to control for unobservable differences among women in the sample. The results suggest that predicted hazard rates of marriage are highly correlated with race and ethnicity variables, making minority women no different from white women in their welfare proneness once their arriageability is controlled for. In addition, divorced women with higher marriage prospects are more likely to participate on welfare, suggesting that they consider marriage and welfare to be substitutes.... The data used for this study is the National Longitudinal Survey of Youth (NLSY) with supplementary geocode data that indicate where the respondent lived each year.
	Bibliography Citation Kumazawa, Risa. "Effects of Heterogeneity in Marital Status on Welfare Participation." Working Paper, Department of Economics, Illinois Wesleyan University, Bloomington, IL, April 2003.

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