Depression, Risk Preferences and Risk-taking Behavior

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    Author
    Cobb-Clark, DA; Dahmann, SC; Kettlewell, N
    Date
    2021
    Source Title
    The Journal of Human Resources
    Publisher
    University of Wisconsin Press
    University of Melbourne Author/s
    Dahmann, Sarah
    Affiliation
    Melbourne Institute of Applied Economic and Social Research
    Metadata
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    Document Type
    Journal Article
    Citations
    Cobb-Clark, D. A., Dahmann, S. C. & Kettlewell, N. (2021). Depression, Risk Preferences and Risk-taking Behavior. Journal of Human Resources, Forthcoming, pp.0419-10183R1. https://doi.org/10.3368/jhr.58.1.0419-10183r1.
    Access Status
    Access this item via the Open Access location
    URI
    http://hdl.handle.net/11343/258627
    DOI
    10.3368/jhr.58.1.0419-10183r1
    Open Access URL
    https://www.iza.org/publications/dp/12285
    Abstract
    Depression affects the way that people process information and make decisions, including those involving risk and uncertainty. Our objective is to analyze the way that depressive episodes shape risk preferences and risk-taking behaviors. Using large, representative German household data we find no disparity in the behavioral risk preferences of the mentally well vs. depressed; yet depression is related to people’s stated risk preferences and risk-taking behaviors in ways that are context-specific. We develop a conceptual model and show that differences in risk-taking behavior are largely explained by depression-related disparities in behavioral traits such as locus of control, optimism and trust.

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