EconPapers    
Economics at your fingertips  
 

Split personalities? Behavioral effects of temperature on financial decision‐making

Despina Gavresi, Anastasia Litina () and Christos A. Makridis

Kyklos, 2024, vol. 77, issue 3, 664-689

Abstract: The fact that environmental factors have a broader effect on financial decision‐making has been lengthily explored, but there is a gap in understanding how personality traits might mediate the effects of temperature on individual decision‐making. Using plausibly exogenous variation of individuals' exposure to changes in national temperature between 2004 and 2018 across NUTS 1 regions in 29 European countries, we estimate the causal effect of a marginal change in temperature on financial investments and its interaction with the trait of optimism/pessimism using Survey of Health, Ageing and Retirement in Europe (SHARE) data. A 10% increase in temperature is associated with a 0.03 percentage point (pp) rise in the probability that an optimist invests in bonds and a 0.024 pp decline in the probability for investment in stocks. However, among pessimists, we find null effects. The results are comparable on the intensive margin. In sum, our results highlight the potentially heterogeneous ways that environmental factors shape individual decision‐making.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/kykl.12382

Related works:
Working Paper: Split Personalities? Behavioral Effects of Temperature on Financial Decision-making (2021) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:kyklos:v:77:y:2024:i:3:p:664-689

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0023-5962

Access Statistics for this article

Kyklos is currently edited by Rene L. Frey

More articles in Kyklos from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2025-03-22
Handle: RePEc:bla:kyklos:v:77:y:2024:i:3:p:664-689