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Stability of risk attitudes and media coverage of economic news

Author

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  • Tausch, Franziska
  • Zumbuehl, Maria
Abstract
This paper investigates the impact of exogenous changes in the economic environment on individuals’ risk attitudes. We combine data on media coverage of economic news with information on the self-stated willingness to take risks from the German Socioeconomic Panel Study. The average daily frequency of economic news reports is measured for different time frames preceding the date of the risk attitude elicitation. We find that while a short term increase in good news is positively related to the willingness to take risks, the relation is negative if we consider a long term increase. An increase in negative economic news coverage is negatively related to individuals’ willingness to take risks, irrespective of the time frame. A positive (negative) correlation between bad (good) news coverage and individuals’ worries about the economic state suggests that changes in risk perception may partly mediate the relation between news coverage and risk attitudes.

Suggested Citation

  • Tausch, Franziska & Zumbuehl, Maria, 2018. "Stability of risk attitudes and media coverage of economic news," Journal of Economic Behavior & Organization, Elsevier, vol. 150(C), pages 295-310.
    • Handle: RePEc:eee:jeborg:v:150:y:2018:i:c:p:295-310
    DOI: 10.1016/j.jebo.2018.01.013
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    More about this item

    Keywords

    Media coverage; Economic news; Stability of risk attitudes; Risk perception;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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