Depression, Risk Preferences and Risk-taking Behavior
AuthorCobb-Clark, DA; Dahmann, SC; Kettlewell, N
Source TitleThe Journal of Human Resources
PublisherUniversity of Wisconsin Press
University of Melbourne Author/sDahmann, Sarah
AffiliationMelbourne Institute of Applied Economic and Social Research
Document TypeJournal Article
CitationsCobb-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 StatusAccess this item via the Open Access location
Open Access URLhttps://www.iza.org/publications/dp/12285
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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