Risk and Time Preference in Consumer Financial Behavior
36 Pages Posted: 26 Oct 2017
Date Written: October 26, 2017
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: Suggested Citation