Happiness as a Driver of Risk-Avoiding Behavior
Robert J. B. Goudie
MRC Biostatistics Unit, Cambridge; University of Warwick - Department of Statistics
Sach N. Mukherjee Sr.
University of Warwick - Department of Statistics
Jan‐Emmanuel De Neve
University of Oxford
Andrew J. Oswald
University of Warwick - Department of Economics; Institute for the Study of Labor (IZA)
Hamilton College - Economics Department
May 19, 2011
CESifo Working Paper Series No. 3451
Understanding the reasons why individuals take risks, particularly unnecessary risks, remains an important question in economics. We provide the first evidence of a powerful connection between happiness and risk-avoidance. Using data on 300,000 Americans, we demonstrate that happier individuals wear seatbelts more frequently. This result is obtained with five different methodological approaches, including Bayesian model-selection and an instrumented analysis based on unhappiness through widowhood. Independent longitudinal data corroborate the finding, showing that happiness is predictive of future motor vehicle accidents. Our results are consistent with a rational-choice explanation: happy people value life and thus act to preserve it.
Number of Pages in PDF File: 40
Keywords: risk preferences, seatbelt usage, vehicle accidents, subjective well-being, happiness
JEL Classification: C300, D600, D810
Date posted: May 23, 2011
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