About depression babies and red diaper babies: Do macroeconomic experiences affect everybody's risk taking in the same way?

Cordes Henning, Dierkes Maik

Abstract

We study how macroeconomic growth experienced throughout a person's lifetime affects the decision to participate in the stock market, and how this interacts with political education. For people who have been raised in the market economy of the Federal Republic of Germany, we find that macroeconomic growth experienced throughout the lifetime predicts the likelihood of holding stocks and recent experiences have a higher impact. These findings do not extend to people who have been raised under the communistic regime of the former German Democratic Republic and thus have experienced a market economy only since the German reunification in 1989.