How vulnerable is risk aversion to wealth, health and other risks? An empirical analysis for Europe
Christophe Courbage (),
Guillem Montoliu-Montes and
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Christophe Courbage: Geneva School of Business Administration (HES-SO), Switzerland
Guillem Montoliu-Montes: University of Lausanne, Department of Actuarial Science, Switzerland
Béatrice Rey: Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France
No 1827, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon
This paper empirically assesses how financial risk aversion reacts to a change in individuals’ wealth and health and to the presence of both financial and health risks using the Survey of Health, Ageing, and Retirement in Europe (SHARE). Individuals in our sample exhibit financial risk aversion decreasing both in wealth and health. Financial risk aversion is also found to increase in the presence of a background financial risk and a background health risk. Interestingly, risk aversion is shown to be convex in wealth but linear in health. Such findings complement the literature on risk aversion behaviours and can help to better understand various economic decisions in a risky environment.
Keywords: risk aversion; (cross-) DARA; (cross-) risk vulnerability; background risk; health risk (search for similar items in EconPapers)
JEL-codes: D01 D81 I12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-eur, nep-rmg and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:1827
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