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Time and risk preferences among the European seniors, relationship and associated factors

Author

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  • Aida Isabel Tavares

    (ISEG, Lisbon School of Economics and Management
    CEISUC, Centre of Studies and Research in Health of the University of Coimbra)

Abstract

Time and risk preferences are part of the decision-making process. These preferences have been studied separately in the literature and less attention has been paid to their interaction. They are interrelated to some extent since uncertainty turns decision outcomes into random results and temporal choice affects present and (uncertain) future well-being. The aim of this paper is to find the possible correlation between risk preferences and time preferences in Europeans over 65 years old. For this purpose, we estimate an extended ordered probit model because of the existence of endogeneity. The main result indicates that after controlling for several determinants, when older people are more risk averse they are also more future-oriented, or people who are more risk tolerant are also more present-oriented. The results reported in this work are relevant for policymakers, businesses, marketeers, and health providers because risk and time preferences in older people affect their decisions in various areas of life.

Suggested Citation

  • Aida Isabel Tavares, 2022. "Time and risk preferences among the European seniors, relationship and associated factors," Journal of Business Economics, Springer, vol. 92(8), pages 1283-1302, October.
    • Handle: RePEc:spr:jbecon:v:92:y:2022:i:8:d:10.1007_s11573-022-01097-6
    DOI: 10.1007/s11573-022-01097-6
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    More about this item

    Keywords

    Time preferences; Risk preferences; Probit; SHARE data;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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