A0316
Title: The long-term effects of experienced macroeconomic shocks on wealth
Authors: Viola Angelini - University of Groningen (Netherlands) [presenting]
Irene Ferrari - University of Venice (Italy)
Abstract: The long-term effects of macroeconomic shocks are examined, defined as multi-year peak-to-trough GDP declines of at least 10 per cent, experienced until young adulthood on the wealth distribution and portfolio allocation of older individuals in Europe. Experiencing more economic depression years when young has a positive effect on wealth at older ages. By analysing individual portfolio choices, preferences and personality, it is found that, while experiencing depression makes individuals more risk averse, it also increases their financial planning horizon and conscientiousness. These results provide evidence that individuals who experience economic depression when young invest less in risky assets but save more, and thus tend to accumulate more wealth in the long run.
