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Happiness as a Driver of Risk-Avoiding Behavior

  • Robert J. B. Goudie
  • Sach Mukherjee
  • Jan-Emmanuel De Neve
  • Andrew J. Oswald
  • Stephen Wu

Understanding the reasons why individuals take risks, particularly unnecessary risks, remains an important question in economics. We provide the first evidence of a powerful connection between happiness and risk-avoidance. Using data on 300,000 Americans, we demonstrate that happier individuals wear seatbelts more frequently. This result is obtained with five different methodological approaches, including Bayesian model-selection and an instrumented analysis based on unhappiness through widowhood. Independent longitudinal data corroborate the finding, showing that happiness is predictive of future motor vehicle accidents. Our results are consistent with a rational-choice explanation: happy people value life and thus act to preserve it.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-05/cesifo1_wp3451.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3451.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3451
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