Group versus individual risk choices in female workgroups in Ethiopia

Abstract

A lottery choice task was conducted to examine the risk attitudes of 352 Ethiopian women who were members of 72 female workgroups in the spices processing business in Addis Ababa. The women were asked to make risk choices on their own, and the same choices together with the other members of their workgroup, as a group decision. Our study is different from earlier research in the field in that it focuses on poor women operating a business in a low-income patriarchal society. The data show younger and more educated women to be more risk-taking in their individual choices than older and less educated women. The group choices were more cautious than the (means of) the individual choices of the members, hence providing evidence of a cautious shift. Groups that were more risk-taking had better business performance in terms of capital gains, hired workers and income earned by the women.