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Changing Risk Preferences at Older Ages

Author

Listed:
  • James Banks

    (Institute for Fiscal Studies and University of Manchester)

  • Elena Bassoli

    (Department of Economics, Ca' Foscari University of Venice)

  • Irene Mammi

    (Department of Economics, Ca' Foscari University of Venice)

Abstract

This paper investigates risk preference at older ages in 14 European countries. Older individuals report greater risk aversion. Using the longitudinal nature of the data we are able to show this relationship between risk preferences and age is not due to cohort effects or selective mortality. We also show, however, that on average roughly forty percent of this overall age effect is actually due to life events such as retirement, health shocks and widowhood or marital change that occur increasingly as individuals age. These life events are a particularly important explanation of the age `effect' for women and for the age group 50-64.

Suggested Citation

  • James Banks & Elena Bassoli & Irene Mammi, 2019. "Changing Risk Preferences at Older Ages," Working Papers 2019:01, Department of Economics, University of Venice "Ca' Foscari".
    • Handle: RePEc:ven:wpaper:2019:01
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    References listed on IDEAS

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    Cited by:

    1. Zexuan Wang & Ismaël Rafaï & Marc Willinger, 2023. "Does age affect the relation between risk and time preferences? Evidence from a representative sample," Southern Economic Journal, John Wiley & Sons, vol. 90(2), pages 341-368, October.
    2. Nolan, Anne & Whelan, Adele & McGuinness, Seamus & Maître, Bertrand, 2019. "Gender, pensions and income in retirement," Research Series, Economic and Social Research Institute (ESRI), number RS87.

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    More about this item

    Keywords

    Risk attitude; ageing; health status; life-related events; SHARE;
    All these keywords.

    JEL classification:

    • 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
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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