Traumatic Life Events and Financial Risk-Taking: the Enduring Impact of Hunger

Christelis, D. and Dobrescu, L. I. (2019) Traumatic Life Events and Financial Risk-Taking: the Enduring Impact of Hunger. Working Paper. Social Science Research Network.

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Publisher's URL: https://doi.org/10.2139/ssrn.3308244

Abstract

Do traumatic past life events - such as experiencing hunger - influence financial risk-taking in older age and what is the mechanism underlying this link? To answer these questions, we use micro data from 13 European countries and investigate the decision to own risky financial assets, defined both narrowly (i.e., consisting of stocks, mutual funds and IRAs) and more widely (i.e., including whole life insurance). We address the potential endogeneity of food deprivation episodes by employing non-parametric partial identification methods that bound its causal effect on the ownership of risky financial assets while making very weak assumptions. We find that experiencing hunger has a decidedly negative effect on owning risky assets. When investigating the mechanism behind these findings, we find a significant adverse causal impact of hunger on one’s willingness to take financial risks.

Item Type:Research Reports or Papers (Working Paper)
Keywords:Hunger, financial risk, portfolio choice, partial identification, SHARE.
Status:Published
Glasgow Author(s) Enlighten ID:Christelis, Dr Dimitris
Authors: Christelis, D., and Dobrescu, L. I.
Subjects:H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
College/School:College of Social Sciences > Adam Smith Business School > Economics
Publisher:Social Science Research Network

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