Financial Risk Aversion, Economic Crises and Past Risk Perception

Alessandro Bucciol and Raffaele Miniaci

No 28/2012, Working Papers from University of Verona, Department of Economics

Abstract: We use a panel dataset from the Dutch Household Survey, covering annually the period 1993-2011, to analyze whether individual risk aversion changes over time with the background economic conditions. Considering six different measures of self-assessed risk aversion, which cover different aspects of risk, our preliminary results show that risk aversion is not stable over time. Its dynamics, however, depends on the type of investor. Those who made no investment in the previous year showed higher risk aversion at the end of the 90s; those who invested, in contrast, showed a steadily constant or decreasing pattern. The gap between the risk aversion of investors and noninvestors was the largest between the end of the 90s and the beginning of the 00s, when the stock market experienced exceptionally high volatility.

Keywords: household finance; risk aversion; background risk; past risk perception (search for similar items in EconPapers)
JEL-codes: D14 D81 G11 (search for similar items in EconPapers)
Pages: 22
Date: 2012-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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