Changes in Risk Attitudes Vary Across Domains Throughout the Life Course

61 Pages Posted: 12 Aug 2022 Last revised: 1 May 2023

See all articles by Neil Murray

Neil Murray

German Institute for Economic Research (DIW Berlin); Free University of Berlin (FUB) - Department of Business and Economics

Levent Neyse

German Institute for Economic Research (DIW Berlin); WZB Berlin Social Science Center; IZA Institute of Labor Economics

Carsten Schroeder

German Institute for Economic Research (DIW Berlin); Free University of Berlin (FUB) - Department of Business and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 9, 2022

Abstract

Risk attitudes are important predictors of various economic decisions and socio-economic 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

JEL Classification: D01, D8, J1

Suggested Citation

Murray, Neil and Neyse, Levent and Schroeder, Carsten, Changes in Risk Attitudes Vary Across Domains Throughout the Life Course (August 9, 2022). Available at SSRN: https://ssrn.com/abstract=4185879 or http://dx.doi.org/10.2139/ssrn.4185879

Neil Murray

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

Levent Neyse (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin, 10785
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Carsten Schroeder

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

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