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Becoming Sensitive: Males' Risk and Time Preferences after the 2008 Financial Crisis

Michael Jetter (), Leandro Magnusson () and Sebastian Roth ()
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Sebastian Roth: University of Western Australia

No 13054, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper presents evidence suggesting men's (but not women's) risk and time preferences have systematically become sensitive to local economic conditions since the 2008 financial crisis. Studying longitudinal, nationally representative data for 22,579 Australian-based respondents in up to 11 surveys from 2002-2015, men respond with increased risk aversion and impatience to a rise in their region's unemployment rate – but only since 2008. We find no such relationship for women or before the crisis. This conclusion persists when accounting for individual-level fixed effects, demographics, national economic conditions, the individual's employment situation, income, wealth, as well as region- and time-specific unobservables. Exploring a potential mechanism, higher regional unemployment rates are also linked to men (but not women) being more unhappy since 2008. This 'happiness channel' only partially explains the link between the local unemployment rate and risk preferences.

Keywords: risk preferences; time preferences; gender differences; financial crisis (search for similar items in EconPapers)
JEL-codes: D81 G11 G14 G41 J16 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2020-03
New Economics Papers: this item is included in nep-lab
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Published in: European Economic Review, 2020, Volume 128

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