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Weather And Financial Risk-Taking: Is Happiness The Channel?

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Executive Summary

Weather variables, in particular sunshine, are found to be strongly correlated with financial variables. The author considers self-reported happiness as a channel through which sunshine affects financial variables. The author examines the influence of happiness on risk-taking behavior by incrementing individual happiness with regional sunshine. The author fined that happy people appear to be more risk-averse in financial decisions and (accordingly) choose safer investments. Happy people take more time for making decisions and have more self-control. Happy people also expect a longer life and (accordingly) seem more concerned about the future than the present and expect less inflation.

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