$$ Weather and Personal Happiness Levels Affects How You Invest

Yep, this tracks. I’m coming from the other end of this spectrum, what with my risky investing behavior.

If you believe that major market moves happen in New York, then watch the weather there. I’ve paid attention to that on occasion, mainly in dark winter storms but it’s only useful for daytrading.

Wouldn’t this mean that in sunnier climates, say in California, people invest more conservatively?

Weather variables, and sunshine in particular, are found to be strongly correlated with financial variables. I consider self-reported happiness as a channel through which sunshine affects financial variables. I examine the influence of happiness on risk-taking behavior by instrumenting individual happiness with regional sunshine, and I find 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 to live longer and accordingly seem more concerned about the future than the present, and expect less in inflation.

Source: “Weather and Financial Risk-Taking: Is Happiness the Channel?” from the German Socio-Economic Panel Study on Economic Research, August, 2009

2 Comments

  1. El Guapo

    I think it could that people who live in sunny climates are either A) more financially secure (retired, wealthy, etc.) and therefore don’t need/want to take as many chances or B) Not wealthy enough to register on any investment radars (most jobs are service/tourism related and don’t pay that well).

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