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When the Market Drives you Crazy: Stock Market Returns and Fatal Car Accidents

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  • Corrado Giulietti
  • Mirco Tonin
  • Michael Vlassopoulos

Abstract

The stock market influences some of the most fundamental economic decisions of investors, such as consumption, saving, and labor supply, through the financial wealth channel. This pa-per provides evidence that daily fluctuations in the stock market have important - and hitherto neglected - spillover effects in another, unrelated domain, namely driving. Using the universe of fatal road car accidents in the United States from 1990 to 2015, we find that a one standard de- viation reduction in daily stock market returns is associated with a 0.5% increase in the number of fatal accidents. A battery of falsification tests support a causal interpretation of this finding. Our results are consistent with immediate emotions stirred by a negative stock market perfor-mance influencing the number of fatal accidents, in particular among inexperienced investors, thus highlighting the broader economic and social consequences of stock market fluctuations.

Suggested Citation

  • Corrado Giulietti & Mirco Tonin & Michael Vlassopoulos, 2018. "When the Market Drives you Crazy: Stock Market Returns and Fatal Car Accidents," CESifo Working Paper Series 7182, CESifo.
  • Handle: RePEc:ces:ceswps:_7182
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    2. Justin Tyndall, 2020. "Pedestrian Deaths and Large Vehicles," Working Papers 2020-4, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    3. Bertoli, Paola & Grembi, Veronica, 2021. "The political cycle of road traffic accidents," Journal of Health Economics, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    stock market; car accidents; emotions;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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