Abstract/Summary

We use correlations in the risk preferences of spouses as a testbed of whether preferences are socially transmitted, rather than being innate as traditionally assumed in economics. We obtain rich measurements of the risk preferences of cohabiting spouses in the rural Ethiopian highlands. This allows us to use correlation coefficients at the level of the couple in regression analysis. We find a strong correlation between the strength of the correlation in risk preferences within a couple and how long a couple has been married. This provides direct evidence for assimilation in the risk preference of spouses, and thus for social transmission of preferences. Assortative mating appears to be less important.