Health shocks and risk aversion

Simon Decker and Hendrik Schmitz

Journal of Health Economics, 2016, vol. 50, issue C, 156-170

Abstract: We empirically assess whether a health shock influences individual risk aversion. We use grip strength data to obtain an objective health shock indicator. In order to account for the non-random nature of our data regression-adjusted matching is employed. Risk preferences are traditionally assumed to be constant. However, we find that a health shock increases individual risk aversion. The finding is robust to a series of sensitivity analyses and persists for at least four years after the shock. Income changes do not seem to be the driving mechanism.

Keywords: Risk preferences; Health shocks; Hand grip strength; Objective health; Regression-adjusted matching (search for similar items in EconPapers)
JEL-codes: C81 D01 D81 I10 I12 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (83)

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Related works:
Working Paper: Health Shocks and Risk Aversion (2015)
Working Paper: Health shocks and risk aversion (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:50:y:2016:i:c:p:156-170

DOI: 10.1016/j.jhealeco.2016.09.006

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