This paper measures risk in the present value of workers’ remaining lifetime earnings. Building upon a common earnings … risk is only moderately correlated with those annual risks and is a much stronger predictor of several major life decisions …. Unlike annual risk, it is often larger for relatively affluent groups. It also has many other covariates, including …

the internal margin, i.e., the strength, of loss aversion, and empirically study the relation between income risk …-income population of Bogotá, characterized by limited financial education and subject to substantial income risk. In line with the … theoretical predictions, we find that an increase in income risk is associated with higher savings for loss-averse individuals …