How vulnerable is risk aversion to wealth, health and other risks? : an empirical analysis for Europe

Courbage, Christophe (Haute école de gestion de Genève, HES-SO // Haute Ecole Spécialisée de Suisse Occidentale) ; Montoliu-Montes, Guillem (Haute école de gestion de Genève, HES-SO // Haute Ecole Spécialisée de Suisse Occidentale ; Department of Actuarial Science, Univ. of Lausanne, Switzerland) ; Rey, Béatrice (Université de Lyon, CNRS, GATE Lyon Saint-Etienne, France)

This paper empirically assesses how financial risk aversion reacts to a change in individuals’ wealth and health and to the introduction of both financial and health risks using the Survey of Health, Ageing, and Retirement in Europe (SHARE). Individuals in our sample exhibit financial risk aversion decreasing both in wealth and health. Financial risk aversion is also found to increase in the presence of both background financial and health risks. Interestingly, the sensitivity of financial risk aversion to wealth, respectively to health, is shown to depend on the presence of a financial background risk, respectively health background risk, but in opposite directions. Such findings can help to better understand various economic decisions in a risky environment.

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London, England, 18-20 September 2017
19 p.
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 Notice créée le 2017-09-25, modifiée le 2018-12-07

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