What Drives the Association between Health and Portfolio Choice?

28 Pages Posted: 20 Jan 2015

See all articles by Christoph Kronenberg

Christoph Kronenberg

University of York

Hans van Kippersluis

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Kirsten I. M. Rohde

Erasmus University Rotterdam; Tinbergen Institute

Date Written: November 20, 2014

Abstract

There is a persistent association between health and portfolio choice, but hardly anything is known about the underlying sources of heterogeneity: what makes healthier individuals hold more risky assets? This paper uses rich Dutch longitudinal data to take into account and explain unobserved heterogeneity in the association between health and portfolio choice. We show that the association largely reflects unobserved heterogeneity, which is driven partly by behavioural variables. Yet even when adding an extensive set of behavioural variables including risk aversion, stock aversion, loss aversion, time preferences, and mental accounting, the association between health and portfolio choice does not completely vanish.

Keywords: Health, portfolio choice, panel data, elderly

JEL Classification: C23, D14, G11, I19

Suggested Citation

Kronenberg, Christoph and van Kippersluis, Hans and Rohde, Kirsten I. M., What Drives the Association between Health and Portfolio Choice? (November 20, 2014). Netspar Discussion Paper No. 11/2014-057, Available at SSRN: https://ssrn.com/abstract=2551770 or http://dx.doi.org/10.2139/ssrn.2551770

Christoph Kronenberg

University of York ( email )

Heslington
University of York
York, YO10 5DD
United Kingdom

Hans Van Kippersluis (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

Burg. Oudlaan 50
Rotterdam, NL 3062 PA
Netherlands

Kirsten I. M. Rohde

Erasmus University Rotterdam ( email )

P.O. Box 1738
Rotterdam, 3000 DR
Netherlands
+31 10 4089548 (Phone)
+31 10 4089141 (Fax)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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