Lifespan Expectations and Financial Decisions: Evidence from Mass Shootings and Natural Disaster Experiences

74 Pages Posted: 15 Dec 2018 Last revised: 5 Mar 2021

See all articles by Vimal Balasubramaniam

Vimal Balasubramaniam

Queen Mary University of London; Centre for Economic Policy Research (CEPR)

Date Written: March 5, 2021

Abstract

This paper investigates the relationship between lifespan expectations and household investments in risky financial assets. Households that experience natural dis- asters and mass shootings in their county and through their social network across the United States are more pessimistic about their life expectancy. These revisions are not justified by Bayes’ rule and are reflective of salient experiences. Lifespan pessimism, instrumented by exogenous experiences, reduces the time-horizon for financial planning and investment in risky assets. These findings suggest that salient personal experiences, and those in the social network, shape lifespan expectations and affect household financial decisions.

Keywords: mortality, expectations, household finance, risky assets, disaster, mass shooting

JEL Classification: D14, D03, D01

Suggested Citation

Balasubramaniam, Vimal, Lifespan Expectations and Financial Decisions: Evidence from Mass Shootings and Natural Disaster Experiences (March 5, 2021). Available at SSRN: https://ssrn.com/abstract=3289627 or http://dx.doi.org/10.2139/ssrn.3289627

Vimal Balasubramaniam (Contact Author)

Queen Mary University of London ( email )

Mile End Road
London, London E1 4NS
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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