Risk aversion, time preferences, and out-migration. Experimental evidence from Ghana and Indonesia

It has long been hypothesized that migrants and non-migrants differ in their individual risk and time preferences. Due to a lack of reliable data on migrants' preferences, empirical evidence, however, is scarce. Therefore, this paper has sought to advance research on preferences and migration decisions by using original household survey data from two developing countries that are both characterized by a longstanding tradition in regional migration. In coastal communities in Ghana and Indonesia, individual risk and time preferences have not only been elicited through survey questions but also through experimental tasks with real and relatively large monetary payoffs. There is evidence that out-migrants from both study regions are significantly less risk averse and have a lower time preference than non-migrants. Overall, the results indicate that the considered individual preferences are as important as employment status, education or networks, which have mainly been the focus of migration theories.