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

Author

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  • 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
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Schurer, Stefanie, 2017. "Bouncing back from health shocks: Locus of control and labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 1-20.
    2. Kesavayuth, Dusanee & Zikos, Vasileios, 2016. "Does well-being help you with unemployment?," MPRA Paper 71918, University Library of Munich, Germany.
    3. Stillman, Steven & Velamuri, Malathi, 2016. "If Life Throws You Lemons, Try To Make Lemonade: Does Locus of Control Help People Cope with Unexpected Shocks?," IZA Discussion Papers 10210, Institute for the Study of Labor (IZA).
    4. Fabrice Etilé & Paul Frijters & David W. Johson & Michael A. Shields, 2017. "Modelling Heterogeneity in the Resilience to Major Socioeconomic Life Events," PSE Working Papers halshs-01485989, HAL.
    5. Heywood, John S. & Jirjahn, Uwe & Struewing, Cornelia, 2017. "Locus of control and performance appraisal," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 205-225.
    6. Warn N. Lekfuangfu & Nattavudh Powdthavee & Nele Warrinnier & Francesca Cornaglia, 2018. "Locus of Control and its Intergenerational Implications for Early Childhood Skill Formation," Economic Journal, Royal Economic Society, vol. 128(608), pages 298-329, February.
    7. Jetter, Michael & Kristoffersen, Ingebjørg, 2017. "Financial Shocks and the Erosion of Interpersonal Trust: Evidence from Longitudinal Data," IZA Discussion Papers 11204, Institute for the Study of Labor (IZA).
    8. Rosemary Elkins & Stefanie Schurer, 2018. "Exploring the role of fathers in non-cognitive skill development over the lifecourse," Working Papers 2018-034, Human Capital and Economic Opportunity Working Group.
    9. repec:eee:ecmode:v:72:y:2018:i:c:p:122-131 is not listed on IDEAS
    10. Malte Preuss & Juliane Hennecke, 2017. "Biased by Success and Failure: How Unemployment Shapes Stated Locus of Control," SOEPpapers on Multidisciplinary Panel Data Research 943, DIW Berlin, The German Socio-Economic Panel (SOEP).
    11. repec:eee:jeborg:v:143:y:2017:i:c:p:98-115 is not listed on IDEAS
    12. Elkins, Rosemary & Schurer, Stefanie, 2018. "Exploring the Role of Fathers in Non-Cognitive Skill Development over the Lifecourse," IZA Discussion Papers 11451, Institute for the Study of Labor (IZA).
    13. Kibrom A. Abay & Guush Berhane & Garrick Blalock, 2018. "Locus of Control and Technology Adoption in Africa: Evidence from Ethiopia," Working Papers PMMA 2018-04, PEP-PMMA.

    More about this item

    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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