In this paper we analyze a large sample of individual responses to six lottery questions. Wederive a simultaneous estimate of risk aversion γ and the time preference discount rate ρ perindividual. This can be done because the consumption of a large prize is smoothed over a largertime period. It is found that ρ and γ strongly vary over individuals, while they are negativelycorrelated with a correlation coefficient of -.3. Furthermore we explain γ and ρ by income,age, gender, entrepreneurship and an obesity index. Very significant effects are found. If weexplain γ in a simple model where time discounting is ignored, we find completely differentestimates for γ . We conclude that in the case of lotteries with big prizes a simultaneous estimateof γ and ρ is needed in order to avoid misspecification. Classification-JEL: D12; D80; D90; E21. Keywords: Expected Utility; Risk Aversion; Time Preference; Lotteries; Hypothetical Questions. File-Url: https://papers.tinbergen.nl/03018.pdf File-Format: application/pdf File-Size: 459634 bytes Handle: RePEc:tin:wpaper:20030018