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Financial Risk Aversion and Personal Life History

  • Alessandro Bucciol


    (Department of Economics (University of Verona))

  • Luca Zarri


    (Department of Economics (University of Verona))

Though risk attitude is central to economics and finance, relatively little is known about how it is formed and how it changes over time. Based on US data from a dedicated psycho-social module on lifestyle of the 2010 Health and Retirement Study (HRS), we provide new evidence on the correlation between financial risk attitude and life-history negative events out of an individual’s control. Using observed portfolio decisions to proxy for risk aversion, we find correlation with two of such events: having been in a natural disaster and (especially) the loss of a child. These effects survive after controlling for classic socio-demographic determinants of risk aversion.

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Paper provided by University of Verona, Department of Economics in its series Working Papers with number 05/2013.

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Length: 25
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:ver:wpaper:05/2013
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