The Intergenerational Transmission of Risk and Trust Attitude in the Indian Demographics

Abstract

The paper aims to figure out two crucial aspects of economic decision-making- willingness to take risks and willingness to trust others in Indian society and how these behaviours are transmitted from parents to children. It classifies the difference in the level of maternal and paternal effects on the children’s risk-taking capacity and trust attitude. For risk, we segregate it into 5 categories- General, driving, finance, educational/Career, and health-related risks. It is seen that the mother’s influence on children is significant in all types owing to the fact that the majority of married Indian women are homemakers and spend more time with children. The influence of fathers was found significant for driving, finance, and health-related risks. It was also found that in most cases, female children tend to be more risk-averse than their male counterparts. We also find that the transmission from parents to children is relatively specific for different risk types. The maternal effect is more prominent when it comes to the transmission of trust attitudes. There is independence between risk-taking behaviour and trust attitude. Both of these behaviours does not influence each other; rather the heterogeneity in these two aspects of economic decision-making lies greatly in the family structure.