Risk Attitudes, Investment Behavior and Linguistic Variation

50 Pages Posted: 27 Dec 2015 Last revised: 15 Feb 2019

See all articles by Juliana Bernhofer

Juliana Bernhofer

Ca Foscari University of Venice - Department of Economics

Francesco Costantini

Università degli Studi di Udine

Matija Kovacic

Ca Foscari University of Venice - Dipartimento di Economia

Multiple version iconThere are 2 versions of this paper

Date Written: February 12, 2019

Abstract

This paper explores the relationship between linguistic variation and individual attitudes toward risk and uncertainty. We propose an innovative marker that classifies languages according to the number of non-indicative moods in the grammatical contexts involving uncertainty. We find that speakers of languages that use these moods more intensively are on average more risk averse. Our marker is then used to instrument risk aversion in the model for financial asset accumulation. In addition, by using Chen (2013)’s FTR linguistic marker as a proxy for the subjective discount rate, we disentangle the effects of risk aversion and time preferences on asset accumulation.

Keywords: Language, Risk Aversion, Financial Assets Accumulation, Instrumental Variables

JEL Classification: D14, D81, D91

Suggested Citation

Bernhofer, Juliana and Costantini, Francesco and Kovacic, Matija, Risk Attitudes, Investment Behavior and Linguistic Variation (February 12, 2019). University Ca' Foscari of Venice, Dept. of Economics Research Paper Series No. 34/15. Available at SSRN: https://ssrn.com/abstract=2708465 or http://dx.doi.org/10.2139/ssrn.2708465

Juliana Bernhofer

Ca Foscari University of Venice - Department of Economics ( email )

Cannaregio 873
Venice, 30121
Italy

Francesco Costantini

Università degli Studi di Udine ( email )

Via Tarcisio Petracco, Palazzo antonini, 8
Udine, 33100
Italy

Matija Kovacic (Contact Author)

Ca Foscari University of Venice - Dipartimento di Economia ( email )

Cannaregio 873
Venice, 30121
Italy

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