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Household Risk Taking after the Financial Crisis

Author Info

  • Sarah Necker

    ()

  • Michael Ziegelmeyer

    ()

Abstract

This study investigates whether and how the crisis in 2008/2009 affects households' risk attitudes, subjective risk and return expectations, and planned financial risk taking using the German SAVE study. Households' wealth change from end-2007 to end-2009 is not found to have an effect. However, households that attribute losses to the crisis decreased their risk tolerance and planned risk taking; the probability of expecting an increase in risks and returns is raised. According to economic theory, wealth changes attributed to a dramatic event should not have a different effect than other wealth changes. The results suggest an emotional reaction.

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File URL: http://www.bcl.lu/fr/publications/cahiers_etudes/85/BCLWP085.pdf
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Paper provided by Central Bank of Luxembourg in its series BCL working papers with number 85.

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Length: 42 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:bcl:bclwop:bclwp085
Contact details of provider: Web page: http://www.bcl.lu/

Keywords: Financial and economic crisis; risk preferences; stock market expectations; wealth fluctuations; emotions;

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Find related papers by JEL classification:
  • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
  • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
  • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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