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Stability of risk attitudes and media coverage of economic news

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  • Tausch, Franziska
  • Zumbuehl, Maria

Abstract

This paper investigates the impact of exogenous changes in the economic environment on individuals’ risk attitudes. We combine data on media coverage of economic news with information on the self-stated willingness to take risks from the German Socioeconomic Panel Study. The average daily frequency of economic news reports is measured for different time frames preceding the date of the risk attitude elicitation. We find that while a short term increase in good news is positively related to the willingness to take risks, the relation is negative if we consider a long term increase. An increase in negative economic news coverage is negatively related to individuals’ willingness to take risks, irrespective of the time frame. A positive (negative) correlation between bad (good) news coverage and individuals’ worries about the economic state suggests that changes in risk perception may partly mediate the relation between news coverage and risk attitudes.

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  • Tausch, Franziska & Zumbuehl, Maria, 2018. "Stability of risk attitudes and media coverage of economic news," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 295-310.
    • Handle: RePEc:eee:jeborg:v:150:y:2018:i:c:p:295-310
    DOI: 10.1016/j.jebo.2018.01.013
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    4. Jetter, Michael & Magnusson, Leandro M. & Roth, Sebastian, 2020. "Becoming sensitive: Males’ risk and time preferences after the 2008 financial crisis," European Economic Review, Elsevier, vol. 128(C).
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    6. Benesch, Christine & Loretz, Simon & Stadelmann, David & Thomas, Tobias, 2019. "Media coverage and immigration worries: Econometric evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 52-67.
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    8. Alexander Benov & Maria Semenova, 2021. "Bank Runs And Media Freedom: What You Don’t Know Won’t Hurt You?," HSE Working papers WP BRP 81/FE/2021, National Research University Higher School of Economics.
    9. Brooks, Chris & Sangiorgi, Ivan & Hillenbrand, Carola & Money, Kevin, 2018. "Why are older investors less willing to take financial risks?," International Review of Financial Analysis, Elsevier, vol. 56(C), pages 52-72.
    10. Raffaele Guetto & Maria Francesca Morabito & Daniele Vignoli & Matthias Vollbracht, 2021. "Media Coverage of the Economy and Fertility," Econometrics Working Papers Archive 2021_12, Universita' degli Studi di Firenze, Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti".
    11. Inam Ullah Khalil & Sehresh Hena & Usman Ghani & Raza Ullah & Inayatullah Jan & Abdul Rauf & Abdul Rehman & Azhar Abbas & Luan Jingdong, 2021. "Development and Sustainability of Rural Economy of Pakistan through Local Community Support for CPEC," Sustainability, MDPI, vol. 13(2), pages 1-17, January.

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    More about this item

    Keywords

    Media coverage; Economic news; Stability of risk attitudes; Risk perception;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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