Happiness as a Driver of Risk-Avoiding Behavior

40 Pages Posted: 23 May 2011  

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; IZA Institute of Labor Economics

Stephen Wu

Hamilton College - Economics Department

Date Written: May 19, 2011

Abstract

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.

Keywords: risk preferences, seatbelt usage, vehicle accidents, subjective well-being, happiness

JEL Classification: C300, D600, D810

Suggested Citation

Goudie, Robert J. B. and Mukherjee, Sach N. and De Neve, Jan‐Emmanuel and Oswald, Andrew J. and Wu, Stephen, Happiness as a Driver of Risk-Avoiding Behavior (May 19, 2011). CESifo Working Paper Series No. 3451. Available at SSRN: https://ssrn.com/abstract=1846390

Robert J. B. Goudie

MRC Biostatistics Unit, Cambridge ( email )

Robinson Way
Cambridge, CB2 0SR
United Kingdom

University of Warwick - Department of Statistics ( email )

Coventry CV4 7AL
United Kingdom

Sach N. Mukherjee Sr.

University of Warwick - Department of Statistics ( email )

Coventry CV4 7AL
United Kingdom

Jan-Emmanuel De Neve (Contact Author)

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Andrew J. Oswald

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom
523510 (Phone)

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Stephen Wu

Hamilton College - Economics Department ( email )

198 College Hill Road
Clinton, NY 13323
United States

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