Emotions, Risk Attitudes, and Patience

SOEPpapers 1041, 80 S.

Armando N. Meier


get_appDownload (PDF  2.01 MB)


Previous work has shown that preferences are not always stable across time, but surprisingly little is known about the reasons for this instability. I examine whether variation in people’s emotions over time predicts changes in preferences. Using a large panel data set, I find that within-person changes in happiness, anger, and fear have substantial effects on risk attitudes and patience. Robustness checks indicate a limited role of alternative explanations. I further address potential endogeneity concerns by exploiting information about the death of a parent or child. This identification strategy confirms a large causal impact of emotions on preferences.

Topics: Family

JEL-Classification: D01;D90;D91
Keywords: Emotions, risk attitudes, patience, risk preferences, time preferences
Frei zugängliche Version: (econstor)