Abstract:

This study examines the relationship between the Hofstede cultural values of long-term-short-term orientation, indulgence-restraint, and risk aversion in 53 developed and developing countries. To test our two hypotheses, we controlled for the country’s per capita income, and religiosity. Using multiple linear regression analysis and secondary data from Hofstede’s Cultural Study in 2010, Relative Risk Aversion Around the World, the Country-level Religiosity Index, and the World Bank Group; the results suggest that indulgence has a positive and significant impact on the country’s risk aversion but the long-term orientation has a positive and nonsignificant impact on the country’s risk aversion. This study confirms that cultural values matter when it comes to risk aversion across countries. Not only individualism and uncertainty avoidance influence risk aversion in countries but also indulgencerestraint.