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Household Risk Taking after the Financial Crisis

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  • Sarah Necker

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  • Michael Ziegelmeyer

    ()

Abstract

This study investigates whether and how the crisis in 2008/2009 affects households' risk attitudes, subjective risk and return expectations, and planned financial risk taking using the German SAVE study. Households' wealth change from end-2007 to end-2009 is not found to have an effect. However, households that attribute losses to the crisis decreased their risk tolerance and planned risk taking; the probability of expecting an increase in risks and returns is raised. According to economic theory, wealth changes attributed to a dramatic event should not have a different effect than other wealth changes. The results suggest an emotional reaction.

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File URL: http://www.bcl.lu/fr/publications/cahiers_etudes/85/BCLWP085.pdf
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Bibliographic Info

Paper provided by Central Bank of Luxembourg in its series BCL working papers with number 85.

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Length: 42 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:bcl:bclwop:bclwp085

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Web page: http://www.bcl.lu/

Related research

Keywords: Financial and economic crisis; risk preferences; stock market expectations; wealth fluctuations; emotions;

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