Table 7

Predictions for Explaining the Depression-Gaps in Risk-Taking Behaviors

Financial Risk-TakingHealth Risk-TakingSocial Risk-Taking
Risky AssetsNo InsuranceSmokerPoor Diet / SedentaryLend BelongingsLend Money
Panel A: Observed Behavior
Depressed take … riskLessMoreMoreMoreLessMore
Panel B: Hypothesized Behavior
Budget constraints and discounting
Lower income/wealthLess due to less wealth to invest and DARAa in wealthLess due to DARA in wealthLess due to cigarette costsMore due to healthier options more expensiveLess due to less capacity to lendLess due to less capacity to lend
Lower time horizonLess due to undervaluing future return.More due to “nothing to lose”More due to “nothing to lose”Less due to undervaluing future returnsLess due to undervaluing future returns
Lower patienceLess due to discounting future returnsMore due to discounting future costsMore due to discounting future costsLess due to discounting future rewardsLess due to discounting future rewards
Time-inconsistent preferences
Lower self-controlMore due to overweighing presentLess due to overweighing presentLess due to overweighing present
Less internal locus of control
Higher impulsivity
Lower conscientiousness
Cognitive limitationsLess due to avoidance of complicated tasks
Emotions and expectations
Lower emotional stabilityMore due to stronger emotional drive??
Lower optimismLess due to underestimation of future return.Less due to higher perceived need for insuranceLess due to overvaluing future costsLess due to lower perceived future benefitsLess due to lower perceived future benefits
Lower prediction accuracy????
Lower trustLessLess
  • Notes: Panel 1 reports the observed depression-gap in risk-taking behaviors from the results presented in Tables 4, 5, and 6. Panel 2 presents our hypothesis of how each factor (mediator) in Column 1 may affect each risk-taking behavior. Mediators that are expected to close the observed depression-gap in risk-taking behavior when controlling for them in regressions are italicized, while factors that are expected to widen the gap are bold.

  • aDecreasing absolute risk aversion.