1 Risk Attitudes and Well-Being in Latin America*

In 1930, Irving Fisher made a bold claim that has often been taken as a matter of fact in the policy and academic literatures on economic development ever since. He claimed that, to paraphrase, people remain poor because their inherent preferences are incompatible with growth (1, 2). Since then discussions about attitudes towards risk (3, 4) have caused the conjecture to morph into a statement often associated with the “culture of poverty: ” people remain poor because they are too impatient to save and too risk averse to take the sort of chances needed to accumulate wealth. Despite early economic experiments that found no significant link between the risk preferences of poor farmers and wealth (5, 6, 7) and, that “poor ” rats tended to actually have lower discount rates in an innovative animal study that exhibited the sort of internal validity not attainable in human studies (8), this conjecture continues to be the basis of economic models (9, 10, 11, 12) and policy (13, 14, 15, 16). The importance of this claim about the characteristics of the poor ha