Changes in risk attitudes vary across domains throughout the life course

Neil Murray, Levent Neyse and Carsten Schröder

Journal of Economic Behavior & Organization, 2023, vol. 212, issue C, 534-563

Abstract: Risk attitudes are important predictors of various economic decisions and socioeconomic outcomes. Although studies show that peoples’ general willingness to take risks decreases with age, there are few reports on the age dependence of domain-specific risk attitudes. Drawing on the Socio-Economic Panel (SOEP), this study employs a proxy variable approach to disentangle age from periodic and cohort effects, while allowing the age effect to take a flexible functional form. Our analyses indicate that risk attitudes are domain-specific. Additionally, we show that age-profiles of general rather than domain-specific risk attitudes can lead to misleading results when they are used to predict life outcomes.

Keywords: Risk attitudes; Willingness to take risks; SOEP; Life cycle; Age-period-cohort (search for similar items in EconPapers)
JEL-codes: D01 D8 J1 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:212:y:2023:i:c:p:534-563

DOI: 10.1016/j.jebo.2023.06.012

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