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Cancer and Portfolio Choice: Evidence from Norwegian Register Data
[The age of reason: financial decisions over the life cycle and implications for regulation]

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  • Trond Døskeland
  • Jens Soerlie Kvaerner

Abstract

We examine the personal investment decisions of 60,000 households following a cancer diagnosis. To create a control group that minimizes the likelihood that the results are confounded by lifestyle factors, we rely on households diagnosed with the same diagnosis but a few years later. Our estimates show that a cancer diagnosis reduces households’ willingness to take risks with their financial wealth. We use the vast heterogeneity among cancers regarding its impact on life expectancy (LE) and income to analyze through which channels cancer impact risk-taking. We find that cancers that have a greater impact on LE and income cause a larger reduction in risk-taking. These two channels account for about 40–90% of the estimated effects of cancer on personal investment decisions. We do not find any association between having dealt with cancer many years ago and current portfolio choices.

Suggested Citation

  • Trond Døskeland & Jens Soerlie Kvaerner, 2022. "Cancer and Portfolio Choice: Evidence from Norwegian Register Data [The age of reason: financial decisions over the life cycle and implications for regulation]," Review of Finance, European Finance Association, vol. 26(2), pages 407-442.
    • Handle: RePEc:oup:revfin:v:26:y:2022:i:2:p:407-442.
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    2. Björn Bos & Moritz A. Drupp & Jasper N. Meya & Martin F. Quaas, 2023. "Financial Risk-Taking under Health Risk," CESifo Working Paper Series 10387, CESifo.
    3. Kárpáti, Daniel, 2023. "Essays in finance & health," Other publications TiSEM 5505e140-1f4d-4f61-a5a5-e, Tilburg University, School of Economics and Management.

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    More about this item

    Keywords

    Portfolio choice; Health shocks; Cancer;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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