Risk and Refugee Migration

This paper examines refugees’ risk preferences using an experimental approach. It also explores whether refugees’ experience of violence may change their attitudes, either exacerbating risk-seeking behavior or diminishing it. Information about the migration decisions and risk preferences of refugees was gathered from 206 asylum-seekers in Luxembourg in 2017-2018. The authors propose a model of refugee migration that is based on ‘cumulative prospect theory’, which takes into account decreasing marginal utility, loss aversion (i.e. a loss is more painful than a gain is enjoyable) and probability distortion, as an alternative to standard ‘expected utility theory’. The authors find that refugees’ risk preferences have characteristics that clearly distinguish them from other populations. Compared to other populations, refugees were found to: (a) value gains more—refugees obtain increasingly higher utility levels for positive payoffs, e.g. migrating to a Western country with potentially very good opportunities is highly valued; (b) be less loss averse, e.g. if the status quo is war, then refugees do not have much to lose, and they may well be less sensitive to negative outcomes; and (c) be less likely to distort probabilities, e.g. risk of dying when crossing the Mediterranean.