Childhood exposure to the Second World War and financial risk taking in adult life

Adverse childhood experiences might have long-lasting effects on decisions under uncertainty in adult life. Merging the European Survey on Health, Ageing and Retirement with data on conflict events during the Second World War, and relying on region-by-cohort variation in war exposure, we show that warfare exposure during childhood is associated with lower financial risk taking in later life. Individuals who experienced war episodes as children hold less – and are less likely to hold – stocks, but are more likely to hold life insurance, compared to non-exposed individuals. Effects are robust to the inclusion of potential mediating factors, and are tested for nonlinearity and heterogeneity. Moreover, we provide evidence of hedonic adaptation to war, as high and low intensity of war exposure have comparable long-term effects. We also document that war exposure in childhood increases sensitivity to financial uncertainty since exposed-to-war individuals are less likely to hold stocks after periods of high volatility. Finally, we shed light on the most likely mechanism in the relationship between war exposure and financial risk taking – i.e., enhanced sensitivity to uncertainty – and we show that preferences, and not beliefs, channel this relationship.     

Procrastination, prompts, and preferences: Evidence from daily records of self-directed learning activities

This paper presents evidence showing that a libertarian paternalistic intervention having significant but uneven effects on the student procrastination of a coursework assignment. We observe the degree of procrastination in a language course at a Japanese university with individuals’ electronic records of daily activities. With a quasi-experiment that generates variations in the frequency of interventions and the preference of students towards the course, we examine the effects of in-class verbal prompts by an instructor on the timing of task completion. We find that prompts affect behavior, especially when reinforced, but the responsiveness depends on the class preferences and the timing of interventions.     

Changing attitudes to risk at older ages: The role of health and other life events

This paper investigates risk attitudes at older ages in 14 European countries. Older individuals report lower willingness to take risks in all countries. Using panel data we are able to show that this relationship between financial risk attitudes and age is not due to cohort effects or selective mortality. We also show that key mechanisms driving this change with age are health changes and other life events – in our preferred specification around half of the overall evolution of risk attitudes with age can be explained by health shocks, retirement, and widowhood or marital change that occur increasingly frequently as individuals age. These life-events are a particularly important explanation of the evolution of risk attitudes for women.