Abstract
This study examines how past disaster experiences influence household participation in the market for risky assets and the mediating role that personality traits play in this relationship. Using micro-panel survey data from the Survey of Health, Aging, and Retirement in Europe matched with disaster declarations data from the Emergency Events Database, we find that prior natural and technological disaster experiences have a substantial impact on lowering households’ propensity to hold risky assets in the financial market and their allocation to risky assets. The findings indicate that at least two of the Big Five personality traits—openness to experience and neuroticism—increase modestly in persons aged 50 and older following a disaster occurrence. Furthermore, we find that personality traits partially mediate the association between disaster experience and ownership of risky assets, with a combined indirect effect of about -3%. These findings suggest that when encouraging household portfolio choice, policymakers and practitioners should take psychological and environmental shocks into account.
Presenters
Enock Desmond OpokuStudent, PhD in Economics and Management, University of Verona, Italy
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
Technical, Political, and Social Responses
KEYWORDS
DISASTER EXPERIENCE, PORTFOLIO CHOICE, PERSONALITY TRAITS, SHARE
