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Do Happy People Make Optimistic Investors?

Published online by Cambridge University Press:  18 July 2014

Guy Kaplanski ,
Haim Levy ,
Chris Veld  and
Yulia Veld-Merkoulova
Guy Kaplanski
Affiliation:
guykap@biu.ac.il, Graduate School of Business Administration, Bar-Ilan University, Ramat Gan 52900, Israel
Haim Levy*
Affiliation:
mshlevy@mscc.huji.ac.il, School of Business Administration, Hebrew University of Jerusalem, Mt Scopus, Jerusalem 91905, Israel
Chris Veld
Affiliation:
chris.veld@monash.edu, Department of Banking and Finance, Monash University, Caulfield East, VIC 3145, Australia
Yulia Veld-Merkoulova
Affiliation:
yulia.veld-merkoulova@monash.edu, Department of Banking and Finance, Monash University, Caulfield East, VIC 3145, Australia.
*
*Corresponding author: mshlevy@mscc.huji.ac.il
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Abstract

Do happy people predict future risk and return differently from unhappy people, or do individuals rely only on economic facts? We survey investors on their subjective sentiment-creating factors, return and risk expectations, and investment plans. We find that noneconomic factors systematically affect return and risk expectations, where the return effect is more profound. Investment plans are also affected by noneconomic factors. Sports results and general feelings significantly affect predictions. Sufferers from seasonal affective disorder have lower return expectations in the autumn than in other seasons, supporting the winter blues hypothesis.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 50 , Issue 1-2 , April 2015 , pp. 145 - 168
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2014 

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