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Emotions, Risk Attitudes, and Patience

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  • Armando N. Meier

Abstract

Previous work has shown that preferences are not always stable across time, but surprisingly little is known about the reasons for this instability. I examine whether variation in people’s emotions over time predicts changes in preferences. Using a large panel data set, I find that within-person changes in happiness, anger, and fear have substantial effects on risk attitudes and patience. Robustness checks indicate a limited role of alternative explanations. I further address potential endogeneity concerns by exploiting information about the death of a parent or child. This identification strategy confirms a large causal impact of emotions on preferences.

Suggested Citation

  • Armando N. Meier, 2019. "Emotions, Risk Attitudes, and Patience," SOEPpapers on Multidisciplinary Panel Data Research 1041, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp1041
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    2. Meier, Armando N. & Schmid, Lukas & Stutzer, Alois, 2019. "Rain, emotions and voting for the status quo," European Economic Review, Elsevier, vol. 119(C), pages 434-451.
    3. Sumit S. Deole & Yue Huang, 2024. "Suffering and prejudice: do negative emotions predict immigration concerns?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-39, June.
    4. Preuss, Malte, 2021. "Intra-individual stability of two survey measures on forward-looking attitude," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 201-227.
    5. Getik, Demid & Meier, Armando N., 2020. "Peer Gender and Mental Health," Working papers 2020/15, Faculty of Business and Economics - University of Basel.
    6. Barokas, Guy & Ling, Hila Hindy & Sherman, Arie & Shavit, Tal, 2024. "To change or not to change? – Status quo bias and happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 224(C), pages 656-671.
    7. Andersson, Ola & Campos-Mercade, Pol & Meier, Armando N. & Wengström, Erik, 2021. "Anticipation of COVID-19 vaccines reduces willingness to socially distance," Journal of Health Economics, Elsevier, vol. 80(C).
    8. Aronsson, Thomas & Hetschko, Clemens & Schöb, Ronnie, 2020. "Globalization, Time-Preferences, and Populist Voting," Umeå Economic Studies 978, Umeå University, Department of Economics.
    9. Franco, Catalina & Mahadevan, Meera, 2021. "Behavioral dynamics in transitions from college to the workforce," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 567-590.
    10. Jan-Emmanuel De Neve & Christian Krekel & George Ward, 2019. "Employee wellbeing, productivity and firm performance," CEP Discussion Papers dp1605, Centre for Economic Performance, LSE.

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    More about this item

    Keywords

    Emotions; risk attitudes; patience; risk preferences; time preferences;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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