Risk Attitudes, Investment Behavior, and Linguistic Variation

ABSTRACT

This study explores the relationship between linguistic variation and individual attitudes toward risk and uncertainty. We propose an innovative marker that classifies languages according to the number of nonindicative moods in the grammatical contexts involving uncertainty. We find that speakers of languages that use these moods more intensively are on average more risk averse. Our marker is then used to instrument risk aversion in the model for financial asset accumulation. In addition, by using the Chen (2013) future time reference linguistic marker as a proxy for the subjective discount rate, we disentangle the effects of risk aversion and time preferences on asset accumulation.