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Household Risk Taking after the Financial Crisis

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Listed author(s):
  • 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/Recherche/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
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;

Other versions of this item:

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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Cited by:

  1. Ampudia, Miguel & Ehrmann, Michael, 2017. "Macroeconomic experiences and risk taking of euro area households," European Economic Review, Elsevier, vol. 91(C), pages 146-156.
  2. repec:zbw:rwirep:0528 is not listed on IDEAS
  3. Marvin Deversi, 2014. "Do Macroeconomic Shocks Affect Intuitive Inflation Forecasting? An Experimental Investigation," Ruhr Economic Papers 0528, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Deversi, Marvin, 2014. "Do Macroeconomic Shocks Affect Intuitive Inflation Forecasting? An Experimental Investigation," Ruhr Economic Papers 528, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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