When the Market Drives you Crazy: Stock Market Returns and Fatal Car Accidents

Arbeitspapier

The stock market influences some of the most fundamental economic decisions of investors, such as consumption, saving, and labor supply, through the financial wealth channel. This pa-per provides evidence that daily fluctuations in the stock market have important - and hitherto neglected - spillover effects in another, unrelated domain, namely driving. Using the universe of fatal road car accidents in the United States from 1990 to 2015, we find that a one standard de- viation reduction in daily stock market returns is associated with a 0.5% increase in the number of fatal accidents. A battery of falsification tests support a causal interpretation of this finding. Our results are consistent with immediate emotions stirred by a negative stock market perfor-mance influencing the number of fatal accidents, in particular among inexperienced investors, thus highlighting the broader economic and social consequences of stock market fluctuations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 7182

Classification and Topics

• Classification: Wirtschaft ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise ; Behavioral Finance: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets‡
• Subject: stock market ; car accidents ; emotions

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Giulietti, Corrado ; Tonin, Mirco ; Vlassopoulos, Michael
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2018

Further information

• Handle: http://hdl.handle.net/10419/185380
• Last update: 10.03.2025, 11:42 AM CET