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Emotions, Risk Attitudes, and Patience

Armando Meier ()

No 1041, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: Previous work has shown that preferences are not always stable across time, but surprisingly little is known about the reasons for this instability. I examine whether variation in people’s emotions over time predicts changes in preferences. Using a large panel data set, I find that within-person changes in happiness, anger, and fear have substantial effects on risk attitudes and patience. Robustness checks indicate a limited role of alternative explanations. I further address potential endogeneity concerns by exploiting information about the death of a parent or child. This identification strategy confirms a large causal impact of emotions on preferences.

Keywords: Emotions; risk attitudes; patience; risk preferences; time preferences (search for similar items in EconPapers)
JEL-codes: D01 D90 D91 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-rmg
Date: 2019
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