Risk Attitudes, Investment Behavior and Linguistic Variation
49 Pages Posted: 27 Dec 2015 Last revised: 19 Mar 2018
Date Written: March 10, 2018
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: Z13, D81, D14
Suggested Citation: Suggested Citation