When the Market Drives You Crazy: Stock Market Returns and Fatal Car Accidents

27 Pages Posted: 28 Aug 2018

See all articles by Corrado Giulietti

Corrado Giulietti

Department of Economics

Mirco Tonin

Free University of Bozen-Bolzano; IZA; CESifo (Center for Economic Studies and Ifo Institute)

Michael Vlassopoulos

University of Southampton; IZA -- Institute for the Study of Labor

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Abstract

The stock market influences some of the most fundamental economic decisions of investors, such as consumption, saving, and labor supply, through the financial wealth channel. This paper provides evidence that daily fluctuations in the stock market have important - and hitherto neglected - spillover effects in another, unrelated domain, namely driving. Using the universe of fatal road car accidents in the United States from 1990 to 2015, we find that a one standard deviation reduction in daily stock market returns is associated with a 0.5% increase in the number of fatal accidents. A battery of falsification tests support a causal interpretation of this finding. Our results are consistent with immediate emotions stirred by a negative stock market performance influencing the number of fatal accidents, in particular among inexperienced investors, thus highlighting the broader economic and social consequences of stock market fluctuations.

Keywords: stock market, car accidents, emotions

JEL Classification: D91, R41, G41

Suggested Citation

Giulietti, Corrado and Tonin, Mirco and Vlassopoulos, Michael, When the Market Drives You Crazy: Stock Market Returns and Fatal Car Accidents. IZA Discussion Paper No. 11720. Available at SSRN: https://ssrn.com/abstract=3238545

Corrado Giulietti (Contact Author)

Department of Economics ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Mirco Tonin

Free University of Bozen-Bolzano ( email )

Sernesiplatz 1
Bozen-Bolzano, BZ 39100
Italy

IZA ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=3339

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Michael Vlassopoulos

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

IZA -- Institute for the Study of Labor ( email )

Bonn

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