Risk and Time Preference in Consumer Financial Behavior

36 Pages Posted: 26 Oct 2017

See all articles by Brigitte Fünfgeld

Brigitte Fünfgeld

University of Zurich

Mei Wang

WHU - Otto Beisheim School of Management

Date Written: October 26, 2017

Abstract

We conducted experiments to elicit risk attitudes and time preferences for 161 participants up to the age of 84 years old. These are compared to their self-reported behavior in daily financial matters. The results show that individual differences in financial behavior are significant in predicting risk and time preferences. Risk aversion is linked to precautionary saving and spending and is inversely correlated with an interest in finance. More consistent time discounting goes with an interest in finance and concern about saving, whereas the level of anxiety predicts hyperbolic discounting behavior.

Keywords: Risk Preferences; Time Preferences

JEL Classification: G02

Suggested Citation

Fünfgeld, Brigitte and Wang, Mei, Risk and Time Preference in Consumer Financial Behavior (October 26, 2017). Available at SSRN: https://ssrn.com/abstract=3059481 or http://dx.doi.org/10.2139/ssrn.3059481

Brigitte Fünfgeld

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Mei Wang (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallender, 56179
Germany

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