Economics, Econometrics and Finance
3 years ago

Attention to Capital Income Risk Key for Optimal Savings Decisions

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SSRN Electronic Journal
The Optimal Amount of Attention to Capital Income Risk and Heterogeneous Precautionary Saving Behavior
Penghui Yin

Paper Summary

The article explores how people decide how much attention to pay to the risk of losing money on investments. It shows that people with less money, lower information costs, higher past investment volatility, and more patience tend to pay more attention to this risk. The study also finds that the more attention people pay to this risk, the better off they are in the long run, especially if they are more risk-averse.

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