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

Listed author(s):
  • 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)

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.

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File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2015n12.pdf
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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2015n12.

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Length: 48pp
Date of creation: Jun 2015
Handle: RePEc:iae:iaewps:wp2015n12
Contact details of provider: Postal:
Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia

Phone: +61 3 8344 2100
Fax: +61 3 8344 2111
Web page: http://www.melbourneinstitute.com/
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