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Does an individual�鶹��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 �鶹��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�鶹��ý�s overall appetite for risk affects if they decide to have children.

�鶹��ý�This particular question is not heavily researched�鶹��ý� people tend to study the impact of income on fertility or risk preferences on financial decisions but not risk preferences on fertility,�鶹��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�鶹��ý�s Economics 585: Applied Econometrics, a master�鶹��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�鶹��ý�s Undergraduate Student-Faculty Research Award

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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.

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

�鶹��ý�In that way, we can think of children as an insurance mechanism,�鶹��ý� she notes. �鶹��ý�When you have uncertainty in consumption, there will be fluctuation in your utility. Children can act as an insurance to hedge against that.�鶹��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�鶹��ý�s drive in seeking out and attaining this particular data set.

�鶹��ý�Hanyu found a German individual-level panel data. What that means is that you�鶹��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,�鶹��ý� said Kaltenberg. �鶹��ý�What�鶹��ý�s unique about the data set is that it�鶹��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.�鶹��ý�

Although Hanyu is still working through the data�鶹��ý�using several advanced, graduate-level techniques to analyze and synthesize the information�鶹��ý�she�鶹��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.

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

�鶹��ý�EEA was the first conference that I presented at,�鶹��ý� said Hanyu. �鶹��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.�鶹��ý�

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

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