Risk preference dynamics around life events
Access status:
Open Access
Type
ArticleAuthor/s
Kettlewell, NathanAbstract
Using a panel of Australians I estimate the dynamic relationship between common life events and risk preferences. Changes in financial circumstances, parenthood and family loss predict changes in risk preferences. Importantly the effects are largest closer to the event date and ...
See moreUsing a panel of Australians I estimate the dynamic relationship between common life events and risk preferences. Changes in financial circumstances, parenthood and family loss predict changes in risk preferences. Importantly the effects are largest closer to the event date and disappear over time. This supports a model of preference formation where risk preferences are (trend) stable but fluctuations are at least partly deterministic. The linkages between life events and risk preferences are explored. There is little evidence that changes in consumption, state dependence, or changes in mental health and mood explain the results. However, emotional stability is an in influential moderator suggesting that emotions play an important role.
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See moreUsing a panel of Australians I estimate the dynamic relationship between common life events and risk preferences. Changes in financial circumstances, parenthood and family loss predict changes in risk preferences. Importantly the effects are largest closer to the event date and disappear over time. This supports a model of preference formation where risk preferences are (trend) stable but fluctuations are at least partly deterministic. The linkages between life events and risk preferences are explored. There is little evidence that changes in consumption, state dependence, or changes in mental health and mood explain the results. However, emotional stability is an in influential moderator suggesting that emotions play an important role.
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Date
2019Source title
Journal of Economic Behavior & OrganizationVolume
162Publisher
ElsevierFunding information
ARC CE140100027Licence
Creative Commons Attribution-NonCommercial-NoDerivatives 4.0Faculty/School
Faculty of Arts and Social Sciences, School of EconomicsDepartment, Discipline or Centre
ARC Centre of Excellence for Children and Families over the Life CourseShare