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Financial Risk Aversion and Personal Life History

Alessandro Bucciol () and Luca Zarri

No 05/2013, Working Papers from University of Verona, Department of Economics

Abstract: Though risk attitude is central to economics and finance, relatively little is known about how it is formed and how it changes over time. Based on US data from a dedicated psycho-social module on lifestyle of the 2010 Health and Retirement Study (HRS), we provide new evidence on the correlation between financial risk attitude and life-history negative events out of an individual’s control. Using observed portfolio decisions to proxy for risk aversion, we find correlation with two of such events: having been in a natural disaster and (especially) the loss of a child. These effects survive after controlling for classic socio-demographic determinants of risk aversion.

Keywords: Risk Aversion; Financial Asset Ownership; Personal Life History; Behavioral Finance (search for similar items in EconPapers)
JEL-codes: D03 D14 D81 G02 G11 (search for similar items in EconPapers)
Pages: 25
Date: 2013-02
New Economics Papers: this item is included in nep-dem and nep-upt
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