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Changes in risk attitudes vary across domains throughout the life course

Author

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  • Murray, Neil
  • Neyse, Levent
  • Schröder, Carsten

Abstract

Risk attitudes are important predictors of various economic decisions and socioeconomic outcomes. Although studies show that peoples’ general willingness to take risks decreases with age, there are few reports on the age dependence of domain-specific risk attitudes. Drawing on the Socio-Economic Panel (SOEP), this study employs a proxy variable approach to disentangle age from periodic and cohort effects, while allowing the age effect to take a flexible functional form. Our analyses indicate that risk attitudes are domain-specific. Additionally, we show that age-profiles of general rather than domain-specific risk attitudes can lead to misleading results when they are used to predict life outcomes.

Suggested Citation

  • Murray, Neil & Neyse, Levent & Schröder, Carsten, 2023. "Changes in risk attitudes vary across domains throughout the life course," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 534-563.
    • Handle: RePEc:eee:jeborg:v:212:y:2023:i:c:p:534-563
    DOI: 10.1016/j.jebo.2023.06.012
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    More about this item

    Keywords

    Risk attitudes; Willingness to take risks; SOEP; Life cycle; Age-period-cohort;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J1 - Labor and Demographic Economics - - Demographic Economics

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