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The effect of health shocks on financial risk preferences differs by personality traits

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  • Jones, A.M.;
  • Rice, N.;
  • Robone, S.;

Abstract

We investigate whether personality traits influence the impact of health shocks on financial risk preferences using 11 waves (1998-2008) from the US Health and Retirement Study (HRS). We model stock market participation and the share of risky assets in portfolios and stratify our sample into single person households and couples. Our results indicate that personality traits play a more important role in the portfolio choices for couples than for single people. Moreover, there are differences between women and men within couples, and between chronic and acute health shocks.

Suggested Citation

  • Jones, A.M.; & Rice, N.; & Robone, S.;, 2018. "The effect of health shocks on financial risk preferences differs by personality traits," Health, Econometrics and Data Group (HEDG) Working Papers 18/07, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:18/07
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    Cited by:

    1. 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".
    2. Safdar Ullah Khan & Satyanarayana Ramella & Habib Ur Rahman & Zulfiqar Hyder, 2022. "Household Portfolio Allocations: Evidence on Risk Preferences from the Household, Income, and Labour Dynamics in Australia (HILDA) Survey Using Tobit Models," JRFM, MDPI, vol. 15(4), pages 1-13, April.
    3. Banks, James & Bassoli, Elena & Mammi, Irene, 2020. "Changing attitudes to risk at older ages: The role of health and other life events," Journal of Economic Psychology, Elsevier, vol. 79(C).
    4. Stefani Milovanska-Farrington & Stephen Farrington, 2021. "Discipline, risk, and the endogeneity between financial decisionmaking and health," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(4), pages 596-636, October.

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    More about this item

    Keywords

    risk preference; health shocks; portfolio choice; personality traits; US Health and Retirement Study;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • I10 - Health, Education, and Welfare - - Health - - - General

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