Health shocks and risk aversion

Simon Decker and Hendrik Schmitz

No 581, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Risk preferences are typically assumed to be constant for an individual across the life cycle. In this paper we empirically assess if they are time varying. Specifically, we analyse whether health shocks influence individual risk aversion. We follow an innovative approach and use grip strength data to obtain an objective health shock indicator. In order to account for the non-random nature of our data we employ regression-adjusted matching. Health shocks are found to increase individual risk aversion. The finding is robust to a series of sensitivity analyses.

Keywords: risk preferences; health shocks; hand grip strength; regression-adjusted matching (search for similar items in EconPapers)
JEL-codes: C81 D01 D81 I10 I12 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-upt
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Health shocks and risk aversion (2016)
Working Paper: Health Shocks and Risk Aversion (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:581

DOI: 10.4419/86788673

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