Important life-events and preferences

The aim of this thesis is to examine whether single life-events can directly influence individuals’ risk preferences. Longitudinal data were used to study this relationship. These data were retrieved from the German Socio-Economic panel, in which participants self-reported their risk preferences. The life-events ob-served were marriage, divorce, the death of a spouse and becoming a parent. The results suggest that becoming a parent significantly increases risk aversion among individuals and thus alters risk preferences. This result provides evidence for risk preferences not being stable but rather subject to change over time.