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Economics

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Does an ageing population become more risk averse?

Geoff Riley

24th October 2017

Societies become considerably more risk-averse as their average age rises, which may have important consequences such as reducing investment in the stock market or the extent of self-employment. 

These are the central findings of new research by Thomas Dohmen, Armin Falk, Bart Golsteyn, David Huffman and Uwe Sunde, published in the October 2017 issue of the Economic Journal.

Their study analyses representative datasets from the Netherlands and Germany to show that there is a substantial decline in willingness to take risks as a country’s population gets older. For example, a rise of 10 years in a society’s median age leads to a reduction in risk attitudes with an effect size equivalent to 2.5% less investment in stocks or 6% less self-employment.

Read more about this research here

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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