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Biased survival expectations and behaviours: does domain specific information matter?

Costa-Font, Joan ORCID: 0000-0001-7174-7919 and Vilaplana-Prieto, Cristina (2021) Biased survival expectations and behaviours: does domain specific information matter? Journal of Risk and Uncertainty. ISSN 0895-5646 (In Press)

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Abstract

We study biased survival expectations across two domains and examine whether such biased expectations influence health and financial behaviors. Combining individual-level longitudinal data, retrospective, and end of life data from several European countries for more than a decade, we estimate time-varying individual level bias in ‘survival expectations' (BSE) at the individual level and compare it biased ‘meteorological expectations' (BME). We exploit variation in an individual's family history (parental age at death) to estimate the effect of BSE on health and financial behaviors and compare it to BME, and other tests to discuss whether the effect of BSE results from the effect of private information. We find that BSE increases the probability of adopting less risky behaviors and financial behaviors. We estimate that a one standard deviation increase in BSE reduces the average probability of smoking by 48% and holding retirement accounts by 69%. In contrast, BME barely affects healthy behaviors, and is only associated with a change in some financial behaviors.

Item Type: Article
Official URL: https://www.springer.com/journal/11166
Additional Information: © 2021 The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature
Divisions: Health Policy
Subjects: R Medicine > RA Public aspects of medicine
B Philosophy. Psychology. Religion > BF Psychology
H Social Sciences > HC Economic History and Conditions
JEL classification: I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health
D - Microeconomics > D1 - Household Behavior and Family Economics > D14 - Personal Finance
G - Financial Economics > G2 - Financial Institutions and Services > G22 - Insurance; Insurance Companies
Date Deposited: 22 Nov 2021 10:39
Last Modified: 23 Nov 2021 08:36
URI: http://eprints.lse.ac.uk/id/eprint/112709

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