Lifespan Expectations and Financial Decisions: Evidence from Mass Shootings and Natural Disaster Experiences
74 Pages Posted: 15 Dec 2018 Last revised: 5 Mar 2021
Date Written: March 5, 2021
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: Suggested Citation