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 Cobb-Clark, Deborah A.
A1 Dahmann, Sarah C.
A1 Kettlewell, Nathan
YR 2021
UL http://jhr.uwpress.org/content/early/2021/09/15/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.