RT Journal Article
SR Electronic
T1 Depression, Risk Preferences and Risk-taking Behavior
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 0419-10183R1
DO 10.3368/jhr.58.1.0419-10183R1
A1 Deborah A. Cobb-Clark
A1 Sarah C. Dahmann
A1 Nathan Kettlewell
YR 2020
UL http://jhr.uwpress.org/content/early/2020/08/14/jhr.58.1.0419-10183R1.abstract
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.