Financial risk taste, business cycles and pervceived risk exposure

We use a panel dataset from the Dutch Household Survey, covering annually the period 1995-2012, to analyse whether individual financial risk taste changes over time with the background macroeconomic and financial conditions, as well as personal and subjective exposure to portfolio risk. Considering six different self-assessed facets, we find that risk appetite is higher during periods of economic growth and lower during periods of recession. Risk taste is however unrelated to time when it refers to safe investments.Risk appetite is also higher when perceived risk exposure in past investments is generally large or falls from one year to another.