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Risk preferences and rural energy transition in China: based on experimental data analyses

Hui Mao,Chaoqian Shi,Heyan Tang,Congyi Dai

Published 2026 in China Agricultural Economic Review

ABSTRACT

The slow-paced energy transition in rural areas has become a significant factor constraining rural development. Risk preferences play a crucial role in decision-making in rural household energy transition. The purpose of this paper is to explore how risk preferences affect rural energy transitions and to make targeted policy recommendations. This paper utilizes survey data from 744 rural households in Shaanxi Province of China and employs experimental economic methods to measure the levels of risk aversion and loss aversion, systematically examining the impacts of risk preferences on rural household energy transition. This study finds that risk preferences have a significant effect on the variety of energy sources used by rural households. Those with higher levels of risk aversion and loss aversion tend to use fewer types of energy sources and are more inclined to use primitive fuels. Additionally, household income, credit participation, and access to information can all mitigate the inhibitory effect on energy transition caused by risk preferences. To the best of the authors' knowledge, this study presents an innovative analysis of the reasons for the slow rural energy transition from the viewpoint of risk preferences and explores its underlying mechanisms. Combined with theoretical modeling, this study provides a new perspective for understanding the characteristics of rural energy transition and explaining the energy utility paradox.

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