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Risk Attitudes, Investment Behavior, and Linguistic Variation

Author

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  • Juliana Bernhofer
  • Francesco Costantini
  • Matija Kovacic

Abstract

This study explores the relationship between linguistic variation and individual attitudes toward risk and uncertainty. We propose an innovative marker that classifies languages according to the number of nonindicative moods in the grammatical contexts involving uncertainty. We find that speakers of languages that use these moods more intensively are on average more risk averse. Our marker is then used to instrument risk aversion in the model for financial asset accumulation. In addition, by using the Chen (2013) future time reference linguistic marker as a proxy for the subjective discount rate, we disentangle the effects of risk aversion and time preferences on asset accumulation.

Suggested Citation

  • Juliana Bernhofer & Francesco Costantini & Matija Kovacic, 2023. "Risk Attitudes, Investment Behavior, and Linguistic Variation," Journal of Human Resources, University of Wisconsin Press, vol. 58(4), pages 1207-1241.
    • Handle: RePEc:uwp:jhriss:v:58:y:2023:i:4:p:1207-1241
    Note: DOI: https://doi.org/10.3368/jhr.59.2.0119-9999R2
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    File URL: http://jhr.uwpress.org/cgi/reprint/58/4/1207
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    Cited by:

    1. Andrew E Clark & Rong Zhu, 2023. "Taking Back Control? Quasi-Experimental Evidence on the Impact of Retirement on Locus of Control," Working Papers halshs-04335808, HAL.

    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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