��򽴫ý

Does an individual��򽴫ý�s willingness to take risks when it comes to general life decisions impact whether they decide to have children?

This is the question that Dyson economics student Hanyu Li ��򽴫ý�23 has set out to answer. While much academic research has studied the relationship between general risk tolerance and financial decisions, there is significantly less around risk tolerance and fertility decisions; in other words, whether a person��򽴫ý�s overall appetite for risk affects if they decide to have children.

��򽴫ý�This particular question is not heavily researched��򽴫ý� people tend to study the impact of income on fertility or risk preferences on financial decisions but not risk preferences on fertility,��򽴫ý� says Hanyu.

Collaborating with her faculty mentor, Dyson Assistant Professor of Economics Mary Kaltenberg, PhD, the duo first began to tackle this question while Hanyu was enrolled in Kaltenberg��򽴫ý�s Economics 585: Applied Econometrics, a master��򽴫ý�s level econometric course. Hanyu, despite being an undergraduate, excelled in the course and wished to continue her research, which she was able to do through the Office of the Provost��򽴫ý�s Undergraduate Student-Faculty Research Award

Image

At the outset, Hanyu and Kaltenberg stressed it was important that their work examines having children within an economics framework, as opposed to analyzing through a biological or sociological lens.

��򽴫ý�In the field of economics and fertility, having children is thought of utility maximizing behavior, like good consumption,��򽴫ý� says Hanyu. ��򽴫ý�Utility maximizing behavior just means that you try to attain the highest level of satisfaction from your economic decisions��򽴫ý�like buying things, or even having children. In our research, we modeled children as a financial instrument.��򽴫ý�

From this framework, Hanyu hypothesized that having children could be more preferred amongst risk-averse individuals; reasoning that children (exhausted parents might argue this) contribute to overall utility, and act as a bulwark against other, constantly fluctuating forms of utility like vacations or fancy cookware.

��򽴫ý�In that way, we can think of children as an insurance mechanism,��򽴫ý� she notes. ��򽴫ý�When you have uncertainty in consumption, there will be fluctuation in your utility. Children can act as an insurance to hedge against that.��򽴫ý�

With Kaltenberg signed on as the Principal Investigator, Hanyu began her analysis, which currently involves a literature review as well as analyzing data sets, including a very helpful data set from a German institute. Kaltenberg noted that often it can be difficult for undergraduate students to obtain strong data and was impressed with Li��򽴫ý�s drive in seeking out and attaining this particular data set.

��򽴫ý�Hanyu found a German individual-level panel data. What that means is that you��򽴫ý�re able to follow people over time, and it has a lot of information about individuals that is usually hard to get access to,��򽴫ý� said Kaltenberg. ��򽴫ý�What��򽴫ý�s unique about the data set is that it��򽴫ý�s really trying to understand you, your person, your level of risk. It asks a series of questions that tries to associate your level of risk tolerance in different domains. It could be that the two are still very correlated.��򽴫ý�

Although Hanyu is still working through the data��򽴫ý�using several advanced, graduate-level techniques to analyze and synthesize the information��򽴫ý�she��򽴫ý�s been able to formulate preliminary results; determining that her original hypothesis has been supported, in that married individuals who are more risk-averse would be more likely to have children.

It is really nice to have such an opportunity, especially as an undergraduate, to be exposed to a professional research environment.

��򽴫ý�We have found that our results are consistent with the hypothesis that risk aversion will increase the probability of having children��򽴫ý�no matter how women evaluate things, the marginal effect is about -6.5%,��򽴫ý� says Hanyu. ��򽴫ý�A one-point increase in the scale of risk tolerance, would decrease the probability of having children by 6.5%.��򽴫ý�

To further hone the research, Hanyu had an opportunity to present her work at the Eastern Economic Association Conference, gaining valuable insight and feedback from economists.

��򽴫ý�EEA was the first conference that I presented at,��򽴫ý� said Hanyu. ��򽴫ý�It is really nice to have such an opportunity, especially as an undergraduate, to be exposed to a professional research environment. I got invaluable feedback concerning model specification and how my research question could be applied to countries with different economic conditions and abortion laws.��򽴫ý�

Hanyu and Kaltenberg are excited to continue their work��򽴫ý�hoping to have it published in a master��򽴫ý�s level journal, contributing to the academic literature, and thinking through possible policy recommendations. They both credit the Provost��򽴫ý�s Undergraduate Student-Faculty Research program for helping provide the time and resources necessary to conduct quality research.

��򽴫ý�What��򽴫ý�s been nice is that it��򽴫ý�s been a continuation from the master��򽴫ý�s course��򽴫ý�having that continuity allowed her to delve deeper into the theory and research itself so that it can become publishable,��򽴫ý� says Kaltenberg. ��򽴫ý�It��򽴫ý�s been really great to work with Hanyu��򽴫ý�with her particularly, because she takes a lot of initiative.��򽴫ý�