Only recently, the higher order risk preferences prudence and temperance have been shown to predict field behavior, such as saving and portfolio choice among the adult population in the Netherlands and Colombia (Noussair et al. 2014; Ibanez et al. 2018). Additional consequences of higher order risk preferences have been investigated theoretically without an empirical validation to date (e.g. prevention of adverse effects (Eeckhoudt and Gollier 2005), especially in – but not limited to – the health and the environmental domain).

While for risk aversion by now there is considerable evidence that the prevalence is rather comparable to that of adults and that it is not developed during adolescence (Harbaugh et al. 2002; Levin et al. 2007; Sutter et al. 2013), for the higher order risk preferences the evidence regarding their prevalence among adolescents and their development during adolescence is still scarce, despite their importance: It consists of only one study by Heinrich and Shachat (2018) investigating the classification of prudence (external margin), who fail to control for cognitive ability. As cognitive abilities have been positively linked to prudence (Braeban et al., 2018; Noussair et al., 2014), they might be important to consider, especially since the results by Heinrich and Shachat (positive relationship between age and prudence) could potentially also be explained by cognitive ability. For intensities of higher order preferences (internal margin), and temperance in general, no study has investigated the prevalence among adolescents or any age-related changes.

Moreover, predictive power for theoretically connected real-life behavior remains unstudied, with exception of the above mentioned studies.

In this study, we investigate the prevalence, age-related changes therein, and possible influence factors of (higher order) risk attitudes and patience amongst adolescents and study related field behavior of (higher order) risk preferences.

Using the method described in Schneider (2017) to elicit intensities of higher order risk preferences building on the elicitation of simple certainty equivalents that are connected to utility functions using a P-Spline approach, we study the strength of prudence and temperance among roughly 700 adolescents, aged 10 to 20, in schools in Germany. We measure cognitive ability with a matrix test and a symbol-digit correspondence test. Field behavior and demographic information are surveyed in a questionnaire targeted at the environment of adolescents, involving questions on general risk taking, planning, health and environmentally friendly behavior, and financial decision making.

We find patience and (higher order) risk preferences to decrease with age with the exception of prudence, but these findings are mainly driven by an increase in cognitive ability. For prudence, independent of cognitive abilities, we find no age effect. Females exhibit higher values of risk aversion, prudence and temperance. Risk aversion, prudence and impatience are significantly correlated with an index of general risk taking behavior, but not temperance. As predicted by theory, we find saving to be positively correlated with prudence and risky investment to be negatively correlated with temperance. Imrudence and impatience predict the risk of addiction (smartphone and drinking behavior).