Coupling couples with copulas: analysis of assortative matching on risk attitude

Nikoloulopoulos, Aristidis K. and Moffatt, Peter G. (2019) Coupling couples with copulas: analysis of assortative matching on risk attitude. Economic Inquiry, 57 (1). pp. 654-666. ISSN 0095-2583

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      We investigate patterns of assortative matching on risk attitude, using self‐reported (ordinal) data on risk attitudes for males and females within married couples, from the German Socio‐Economic Panel over the period 2004–2012. We apply a novel copula‐based bivariate panel ordinal model. Estimation is in two steps: first, a copula‐based Markov model is used to relate the marginal distribution of the response in different time periods, separately for males and females; second, another copula is used to couple the males' and females' conditional (on the past) distributions. We find positive dependence, both in the middle of the distribution, and in the joint tails, and we interpret this as positive assortative matching (PAM). Hence we reject standard assortative matching theories based on risk‐sharing assumptions, and favor models based on alternative assumptions such as the ability of agents to control income risk. We also find evidence of “assimilation”; that is, PAM appearing to increase with years of marriage. (JEL C33, C51, D81)

      Item Type: Article
      Faculty \ School: Faculty of Science > School of Computing Sciences
      Faculty of Social Sciences > School of Economics
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      Depositing User: LivePure Connector
      Date Deposited: 26 Jul 2018 16:30
      Last Modified: 09 Apr 2019 13:39
      DOI: 10.1111/ecin.12726

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