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Can Having Internal Locus of Control Insure against Negative Shocks? Psychological Evidence from Panel Data

Author

Listed:
  • Hielke Buddelmeyer

    (Melbourne Institute of Applied Economic and Social Research, University of Melbourne)

  • Nattavudh Powdthavee

    (Melbourne Institute of Applied Economic and Social Research, University of Melbourne)

Abstract

We investigate whether the intensity of emotional pain following a negative shock is different across the distribution of a person’s locus of control – the extent to which individuals believe that their actions can influence future outcomes. Using panel data from Australia, we show that individuals with strong internal locus of control are psychologically insured against becoming a victim of property crime and death of a close friend, but not against the majority of other life events. The buffering effects vary across gender. Our findings thus add to the existing literature on the benefits of internal locus of control.

Suggested Citation

  • Hielke Buddelmeyer & Nattavudh Powdthavee, 2015. "Can Having Internal Locus of Control Insure against Negative Shocks? Psychological Evidence from Panel Data," Melbourne Institute Working Paper Series wp2015n12, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2015n12
    as

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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2015n12.pdf
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    References listed on IDEAS

    as
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    Keywords

    Locus of control; resilience; well-being; happiness; HILDA;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • I19 - Health, Education, and Welfare - - Health - - - Other
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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