Table 2.

Willingness to pay to eliminate aggregate fluctuations.

	Willingness to pay of
Mean risk tolerance	most risk-averse household		average household		representative agent
0.1	0.659%	[1.467%]	0.339%	[0.706%]	0.356%	[0.791%]
0.2	0.296	[0.660]	0.159	[0.334]	0.167	[0.375]
0.3	0.193	[0.428]	0.106	[0.219]	0.111	[0.246]
0.5	0.116	[0.251]	0.066	[0.130]	0.069	[0.146]
0.7	0.085	[0.178]	0.049	[0.092]	0.051	[0.104]
1.0	0.062	[0.124]	0.037	[0.064]	0.038	[0.072]
1.5	0.044	[0.082]	0.028	[0.043]	0.029	[0.048]
2.0	0.035	[0.062]	0.023	[0.032]	0.024	[0.036]

Willingness to pay is percentage of mean consumption. Most risk-averse household: a household whose risk tolerance (inverse of coefficient of relative risk aversion) approaches zero in an economy where the mean risk tolerance is that shown. Average household: a household whose risk tolerance is the mean risk tolerance shown, in an economy where risk preferences vary. Representative agent: a household in an economy where all households have the risk tolerance shown. Estimated using Consumer Expenditure Survey, 1982–2002. The first number in each column is a bootstrap bias-corrected estimate using 10,000 bootstrap replications, drawing households from the original sample with replacement and then drawing blocks of 18 consecutive months from the estimated aggregate shocks with replacement. The second number in each column, in brackets, is the estimate before bias correction.