PT  - JOURNAL ARTICLE
AU  - Cobb-Clark, Deborah A.
AU  - Dahmann, Sarah C.
AU  - Kettlewell, Nathan
TI  - Depression, Risk Preferences and Risk-taking Behavior
AID  - 10.3368/jhr.58.1.0419-10183R1
DP  - 2020 Jun 10
TA  - Journal of Human Resources
PG  - 0419-10183R1
4099  - http://jhr.uwpress.org/content/early/2020/08/14/jhr.58.1.0419-10183R1.short
4100  - http://jhr.uwpress.org/content/early/2020/08/14/jhr.58.1.0419-10183R1.full
AB  - Depression affects the way that people process information and make decisions, including those involving risk and uncertainty. Our objective is to analyze the way that depressive episodes shape risk preferences and risk-taking behaviors. Using large, representative German household data we find no disparity in the behavioral risk preferences of the mentally well vs. depressed; yet depression is related to people’s stated risk preferences and risk-taking behaviors in ways that are context-specific. We develop a conceptual model and show that differences in risk-taking behavior are largely explained by depression-related disparities in behavioral traits such as locus of control, optimism and trust.