Household Risk Taking after the Financial Crisis

40 Pages Posted: 17 Dec 2014

See all articles by Sarah Necker

Sarah Necker

University of Freiburg

Michael Ziegelmeyer

Banque centrale du Luxembourg; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Social Law and Social Policy

Date Written: March 11, 2013

Abstract

This study investigates whether and how the crisis in 2008/2009 affects households' risk attitudes, subjective risk and return expectations, and planned financial risk taking using the German SAVE study. Households' wealth change from end-2007 to end-2009 is not found to have an effect. However, households that attribute losses to the crisis decreased their risk tolerance and planned risk taking; the probability of expecting an increase in risks and returns is raised. According to economic theory, wealth changes attributed to a dramatic event should not have a different effect than other wealth changes. The results suggest an emotional reaction.

Keywords: Financial and economic crisis, risk preferences, stock market expectations, wealth fluctuations, emotions

JEL Classification: D81, D14, G11

Suggested Citation

Necker, Sarah and Ziegelmeyer, Michael Heinrich, Household Risk Taking after the Financial Crisis (March 11, 2013). Max Planck Institute for Social Law and Social Policy Discussion Paper No. 02-2014. Available at SSRN: https://ssrn.com/abstract=2539016 or http://dx.doi.org/10.2139/ssrn.2539016

Sarah Necker (Contact Author)

University of Freiburg ( email )

Fahnenbergplatz
Freiburg, D-79085
Germany

Michael Heinrich Ziegelmeyer

Banque centrale du Luxembourg ( email )

2, boulevard Royal
Luxembourg, L-2983
Luxembourg

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Social Law and Social Policy ( email )

Amalienstra├če 33
M├╝nchen, 80799
Germany

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