The Impact of Family Structure on Risk Attitudes and Financial Decisions during the Financial Crisis
ARC Centre of Excellence in Population Ageing Research (CEPAR) Working Paper 2014/03
30 Pages Posted: 11 Apr 2014
Date Written: April 9, 2014
Family structures have changed profoundly in most developed countries in recent decades. Declining fertility and marriage rates and increasing divorce rates, together with longer life expectancies, make financial planning more challenging. Our study analyzes the impact of family structure on individuals' attitudes toward risk and on their savings and investment decisions based on data from the German Socio-Economic Panel Study (SOEP) over the period 2004-2010. Using panel data analysis, marital status is found to be a key variable affecting risk attitudes and savings and investment decisions. Compared to people who are single, married individuals report being less willing to take risks, but more likely to invest in risky assets. Our findings indicate that while the recent financial and economic crisis has influenced individuals' attitudes, it has not -- with the exception of investments in risky assets -- affected the savings and investment decisions of individuals.
Keywords: household portfolios, risky asset holding, risk aversion, family formation, marriage
JEL Classification: D14, D81, G11, J11, J12
Suggested Citation: Suggested Citation