Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272031 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10387
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study how background health risk affects financial risk-taking. We elicit financial risk-taking behavior of a representative sample of more than 5,000 Germans in five panel waves during the COVID-19 pandemic. Exploiting variation in local infections across time and space, we find that an increase in infections affecting background health risk translates into higher levels of self-reported fear and decreases financial investments in a risky asset. Once vaccines become available as a self-insurance device, the tempering effect on investments ceases. Our results provide evidence that non-financial background risks affect financial risk-taking, and for the alleviating effect of self-insurance devices.
JEL: 
D14
D91
G11
G41
G51
Document Type: 
Working Paper
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