Familiy Transitions and Risk Attitude

MRIC Working Paper No. 32, 2016

31 Pages Posted: 5 Jan 2016

See all articles by Mark J. Browne

Mark J. Browne

St. John's University - Peter J. Tobin College of Business

Verena Jaeger

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Andreas Richter

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management)

Petra Steinorth

University of Hamburg - Institute for Risk Management and Insurance

Date Written: January 4, 2016

Abstract

We use the German Socio Economic Panel to analyze the impact of life changing events on individuals’ risk tolerance levels over time, which is reported in response to a question on individuals’ willingness to take risks. The dataset follows a representative sample of the German population. We find substantial changes in risk attitudes over time with respect to getting married or separating from a partner, giving birth to a child for the first time, and providing care to a family member. Furthermore, we find that these effects are associated with household structure. In particular, we observe that the risk tolerance of individuals that are referred as the head of household demonstrates more extreme changes associated with life events while having children moderates the changes associated with the dissolution of households.

Keywords: Variable risk attitudes, self-reported risk attitude, life changing events, marital-status transitions, family structure, marriage

JEL Classification: D14, D81, G11, J12, J13

Suggested Citation

Browne, Mark J. and Jaeger, Verena and Richter, Andreas and Steinorth, Petra, Familiy Transitions and Risk Attitude (January 4, 2016). MRIC Working Paper No. 32, 2016. Available at SSRN: https://ssrn.com/abstract=2710688 or http://dx.doi.org/10.2139/ssrn.2710688

Mark J. Browne

St. John's University - Peter J. Tobin College of Business ( email )

New York, NY
United States

Verena Jaeger (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Andreas Richter

Ludwig Maximilian University of Munich (LMU) - Faculty of Business Administration (Munich School of Management) ( email )

Schackstraße 4
Munich, 80539
Germany

Petra Steinorth

University of Hamburg - Institute for Risk Management and Insurance ( email )

Moorweidenstr. 18
Hamburg, 20148

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