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The Role of Happiness in Financial Decisions: Evidence from Financial Portfolio Choice and Five European Countries

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  • Nicholas Apergis

    (University of Piraeus)

  • Tasawar Hayat

    (Quaid-I-Azam University
    King Abdulaziz University)

  • Tareq Saeed

    (King Abdulaziz University)

Abstract

This paper investigates the role of happiness in portfolio choices. Previous literature has only emphasized the reverse association. An additional novelty of the paper is that the analysis focuses on a wider country sample, while the literature has mainly focused on the U.S. and U.K. economies. Based on micro data from five European countries, i.e., France, Germany, Italy, the Netherlands, and the U.K., spanning the period 2009–2014, the results show that higher levels of happiness lead to higher shares of risky assets in financial portfolios. The findings survive a number of robustness tests. When asset holdings are disaggregated by the extent of the risk associated with them, this effect remains only for safe and low-risk assets, whereas the effect for assets with higher risks is the reverse.

Suggested Citation

  • Nicholas Apergis & Tasawar Hayat & Tareq Saeed, 2019. "The Role of Happiness in Financial Decisions: Evidence from Financial Portfolio Choice and Five European Countries," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(3), pages 343-360, September.
    • Handle: RePEc:kap:atlecj:v:47:y:2019:i:3:d:10.1007_s11293-019-09629-2
    DOI: 10.1007/s11293-019-09629-2
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