Weather and Financial Risk-Taking: Is Happiness the Channel?
AbstractWeather variables, in particular sunshine, are found to be strongly correlated with financial variables. I consider self-reported happiness as a channel through which sunshine affects financial variables. I examine the influence of happiness on risk-taking behavior by instrumenting individual happiness with regional sunshine. I find that happy people appear to be more risk-averse in financial decisions and (accordingly) choose safer investments. Happy people take more time for making decisions and have more self-control. Happy people also expect a longer life and (accordingly) seem more concerned about the future than the present and expect less inflation.
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Bibliographic InfoPaper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2009_06.
Date of creation: 16 May 2009
Date of revision:
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happiness; risk-taking; behavioral finance; weather.;
Other versions of this item:
- Cahit Guven, 2009. "Weather and Financial Risk-Taking: Is Happiness the Channel?," SOEPpapers on Multidisciplinary Panel Data Research 218, DIW Berlin, The German Socio-Economic Panel (SOEP).
- D03 - Microeconomics - - General - - - Behavioral Economics; Underlying Principles
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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