Ruhr Economic Papers

Ruhr Economic Papers #707

Does a Spouse’s Health Shock Influence the Partner’s Risk Attitudes?

by Johanna Kokot

UDE, 07/2017, 37 S./p., 8 Euro, ISBN 978-3-86788-825-7 DOI: 10.4419/86788825

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Abstract

The purpose of this study is to investigate the effect of a spouse’s health shock on own risk attitudes. A spouse’s health shock (i.e., the occurrence of a severe disease) can influence own expectations about the probability of falling ill. Moreover, an indisposition of the spouse, which may disrupt the ability and efficiency in sharing the everyday responsibilities, can increase mental and financial pressure, and thus would lead to a reduction of own risk willingness. On the other hand, a health shock may act as a wake-up call to enjoy life and may increase risk willingness. Using German Socio Economic Panel data, this study reveals that a health shock suffered by the spouse decreases own risk willingness. The effect is more pronounced the more serious the health shock is. The findings have implications for health insurance decisions and policy evaluations.

JEL-Classification: C81, D01, D19, D81,

Keywords: Health shock; risk attitudes; spouses

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