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The Disutility of Stock Market Losses: Evidence From Domestic Violence

Author

Listed:
  • Tse-Chun Lin
  • Vesa Pursiainen
  • Lauren Cohen

Abstract

Stock returns during the week are negatively associated with the reported incidence of domestic violence during the weekend. This relationship is primarily driven by negative returns. The incidence of domestic violence increases with the magnitude of losses, and the effect increases with local stock market participation. Our findings suggest that negative wealth shocks caused by stock market crashes can affect stress levels within intimate relationships, escalate arguments, and trigger domestic violence. Stock market losses may reduce household utility beyond the shock to financial wealth, supporting gain-loss models where disutility from losses outweighs the utility from gains of a similar magnitude.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Tse-Chun Lin & Vesa Pursiainen & Lauren Cohen, 2023. "The Disutility of Stock Market Losses: Evidence From Domestic Violence," The Review of Financial Studies, Society for Financial Studies, vol. 36(4), pages 1703-1736.
  • Handle: RePEc:oup:rfinst:v:36:y:2023:i:4:p:1703-1736.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhac049
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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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