Becoming Sensitive: Males' Risk and Time Preferences after the 2008 Financial Crisis

58 Pages Posted: 30 Mar 2020

See all articles by Michael Jetter

Michael Jetter

University of Western Australia; IZA

Leandro M. Magnusson

University of Western Australia

Sebastian Roth

The University of Western Australia

Abstract

This paper presents evidence suggesting men's (but not women's) risk and time preferences have systematically become sensitive to local economic conditions since the 2008 financial crisis. Studying longitudinal, nationally representative data for 22,579 Australian-based respondents in up to 11 surveys from 2002-2015, men respond with increased risk aversion and impatience to a rise in their region's unemployment rate – but only since 2008. We find no such relationship for women or before the crisis. This conclusion persists when accounting for individual-level fixed effects, demographics, national economic conditions, the individual's employment situation, income, wealth, as well as region- and time-specific unobservables. Exploring a potential mechanism, higher regional unemployment rates are also linked to men (but not women) being more unhappy since 2008. This 'happiness channel' only partially explains the link between the local unemployment rate and risk preferences.

Keywords: risk preferences, time preferences, gender differences, financial crisis

JEL Classification: D81, G11, G14, G41, J16

Suggested Citation

Jetter, Michael and Magnusson, Leandro M. and Roth, Sebastian, Becoming Sensitive: Males' Risk and Time Preferences after the 2008 Financial Crisis. IZA Discussion Paper No. 13054, Available at SSRN: https://ssrn.com/abstract=3562844

Michael Jetter (Contact Author)

University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA

Leandro M. Magnusson

University of Western Australia ( email )

35 Stirling Highway, M251
Crawley, WA 6009
Australia
+61 8 6488 2924 (Phone)
+61 8 6488 1016 (Fax)

HOME PAGE: http://www.uwa.edu.au/people/Leandro.Magnusson

Sebastian Roth

The University of Western Australia

35 Stirling Highway
Crawley, Western Australia 6009
Australia

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