Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?*
National University of Singapore · Nanyang Technological University · +10 more institutions
Abstract
We investigate whether individual experiences of macroeconomic shocks affect financial risk taking, as often suggested for the generation that experienced the Great Depression. Using data from the Survey of Consumer Finances from 1960 to 2007, we find that individuals who have experienced low stock market returns throughout their lives so far report lower willingness to take financial risk, are less likely to participate in the stock market, invest a lower fraction of their liquid assets in stocks if they participate, and are more pessimistic about future stock returns. Those who have experienced low bond returns are less likely to own bonds. Results are estimated controlling for age, year effects, and…
Citation impact
- FWCI
- 238.21
- Percentile
- 100%
- References
- 71
Authors
2- UMUlrike MalmendierCorresponding
National University of Singapore, Nanyang Technological University, World Bank, Singapore Management University, Federal Reserve Bank of Chicago, University of Zurich, University of Illinois Urbana-Champaign, University of California, Berkeley, University of Michigan–Ann Arbor, American Finance Association, National Bureau of Economic Research, Stanford University
- SNStefan Nagel
Stanford University, Nanyang Technological University, Federal Reserve Bank of Chicago, University of California, Berkeley, University of Zurich, University of Illinois Urbana-Champaign, National University of Singapore, National Bureau of Economic Research, World Bank, Singapore Management University, University of Michigan–Ann Arbor, American Finance Association
Topics & keywords
- Affect (linguistics)
- Depression (economics)
- Psychology
- Library science
- Sociology
- Economics
- Keynesian economics
- Computer science