Financial Risk Aversion, Economic Crises and Past Risk Perception
AbstractWe use a panel dataset from the Dutch Household Survey, covering annually the period 1993-2011, to analyze whether individual risk aversion changes over time with the background economic conditions. Considering six different measures of self-assessed risk aversion, which cover different aspects of risk, our preliminary results show that risk aversion is not stable over time. Its dynamics, however, depends on the type of investor. Those who made no investment in the previous year showed higher risk aversion at the end of the 90s; those who invested, in contrast, showed a steadily constant or decreasing pattern. The gap between the risk aversion of investors and noninvestors was the largest between the end of the 90s and the beginning of the 00s, when the stock market experienced exceptionally high volatility.
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Bibliographic InfoPaper provided by University of Verona, Department of Economics in its series Working Papers with number 28/2012.
Date of creation: Oct 2012
Date of revision:
household finance; risk aversion; background risk; past risk perception;
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- D14 - Microeconomics - - Household Behavior - - - Personal Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-03 (All new papers)
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