Risk aversion

The fundamental reluctance to take a risk. This aversion can only be overcome if there is a correspondingly high incentive to win, as is the case with gambling activities. – In the case of insurance, the unwillingness of the customer to pay a sum of money (insurance premium) to be released from a risk. – In the financial market, the preference of investors for safe forms of investment. There are methods of measuring this empirically; for example, by comparing the yields of longer-term, highly creditworthy government bonds (prime-rated government bonds: securities issued by countries which, according to reasonable economic considerations and the assessment of investors, are able and willing to repay the loans they have taken out). – The fact that investors avoid long-term (noncurrent) investments in innovation with predictable follow-on investments in aging societies. Therefore, economic growth threatens to slow down and the value of money to decline sooner or later. – See age dependency ratio, investment risk, guaranteed product, Methuselah syndrome, sustainability, risk-return principle, risk appetite, risk avoidance policy, shadow debt, aging. – Cf. ECB Monthly Bulletin of December 2004, p. 19 et seqq., ECB Monthly Bulletin of January 2005, p. 15, Deutsche Bundesbank Monthly Bulletin of September 2005, p. 73 (index of risk aversion is derived), Monthly Bulletin of Deutsche
Bundesbank, October 2005, pp. 92 ff. (detailed presentation), ECB Monthly Bulletin, February 2012, pp. 128 ff. (on the measurement of risk aversion; references).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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