Long-Term Consequences of Growing up in a Recession on Risk Preferences / Hitoshi Shigeoka.

Format:

Book

Author/Creator:

Shigeoka, Hitoshi.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26352.

NBER working paper series no. w26352

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Risk preferences play a fundamental role in individuals' economic decision-making. We examine whether the historical macroeconomic environment shapes individuals' willingness to take risks. Using nationally representative samples from Japan and exploiting regional variation in economic conditions, we find that men who experienced severe economic conditions in youth are more risk averse in adulthood and the effect is long-lasting. In addition, those men are less likely to be self-employed and they have longer tenure, which are consistent with elevated risk aversion. This study highlights the importance of experience at a critical period of life on the formation of risk preferences.

Notes:

Print version record

October 2019.