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Scenes from a Marriage: Divorce and Financial Behavior

Author

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  • Zetterdahl, Emma

    (Department of Economics, Umeå School of Business and Economics)

Abstract

In this paper, the impact of divorce ­­­on individual financial behavior is empirically examined. Evidence that divorcing individuals increase their saving rates before the divorce is presented. This may be seen as a response of the increase in background risk. After the divorce, negative divorce effects on individual saving rates and risky shares are established, which may lead to disparities in wealth accumulation possibilities between married and divorced. Women are, on average, shown to not adjust their precautionary savings to the same extent as men before the divorce. I also provide tentative evidence that women reduce their financial risk-taking more than men after a divorce. This could potentially be a result of inequalities in financial positions or an adjustment towards individual preferences.

Suggested Citation

  • Zetterdahl, Emma, 2015. "Scenes from a Marriage: Divorce and Financial Behavior," Umeå Economic Studies 907, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0907
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    More about this item

    Keywords

    asset allocation; divorce; financial risk taking; saving behavior; risky share;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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