Changing Attitudes to Risk at Older Ages: The role of health and other life events

Publication date: Available online 17 September 2019Source: Journal of Economic PsychologyAuthor(s): James Banks, Elena Bassoli, Irene MammiAbstractThis paper investigates risk attitudes at older ages in 14 European countries. Older individuals report lower willingness to take risks in all countries. Using panel data we are able to show that this relationship between financial risk attitudes and age is not due to cohort effects or selective mortality. We also show that key mechanisms driving this change with age are health changes and other life events — in our preferred specification around half of the overall evolution of risk attitudes with age can be explained by health shocks, retirement, and widowhood or marital change that occur increasingly frequently as individuals age. These life-events are a particularly important explanation of the evolution of risk attitudes for women.

Source: Journal of Economic Psychology - September 17, 2019 Category: Psychiatry & Psychology Source Type: research