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What drives the association between health and portfolio choice?

Author

Listed:
  • Kronenberg, C.
  • van Kippersluis, H.
  • Rohde, K.I.M.

Abstract

There is a persistent association between health and portfolio choice, but hardly anything is known about the underlying sources of heterogeneity: what makes healthier individuals hold more risky assets? This paper uses rich Dutch longitudinal data to take into account and explain unobserved heterogeneity in the association between health and portfolio choice. We show that the association largely reflects unobserved heterogeneity, which is driven partly by behavioural variables. Yet even when adding an extensive set of behavioural variables including risk aversion, stock aversion, loss aversion, time preferences, and mental accounting, the association betweenhealth and portfolio choice does not completely vanish.

Suggested Citation

  • Kronenberg, C. & van Kippersluis, H. & Rohde, K.I.M., 2014. "What drives the association between health and portfolio choice?," Health, Econometrics and Data Group (HEDG) Working Papers 14/27, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:14/27
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    More about this item

    Keywords

    health; portfolio choice; panel data; elderly;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • I19 - Health, Education, and Welfare - - Health - - - Other

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