Heterogeneous and Correlated Risk Preferences in Commercial Fishermen: The Perfect Storm Dilemma

Abstract

Commercial fishing involves both physical and financial risks. This combination questions whether fishermen are inherently risk-loving, whether physical and financial risk preferences are correlated, and how much preferences vary across fishermen. This paper addresses these questions with a panel data set of daily participation decisions in the California sea urchin dive fishery. Weather buoy data and the prevalence of great white sharks at a particular fishing site proxy for physical risk. Overall, urchin fishermen are not risk-loving on average, risk preferences are heterogeneous, and there is some evidence that risk preferences are positively correlated across physical and financial domains. Copyright Springer Science + Business Media, Inc. 2005