time horizon and economic choices
On Tuesday 20 September 2016 Jens Sørlie Kværner will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.
Prescribed topic for the trial lecture:
Should a SWF in a resource-rich country hedge its resource risk? If so, how?
10:15 in Jebsen Centre NHH
Title of the thesis:
Essays on Saving and Investment Choices
By dictating how we discount and compare intermediate versus future benefits, the economic time horizon plays a central role in both individual decision-making and public policy. The thesis investigates how unanticipated changes in life expectancy affect financial choices, using register data including individual cancer diagnoses. From an economic viewpoint, a cancer diagnosis is different from many other diseases because, in addition to the burden of the disease, it can have substantial consequences for life expectancy. Several fundamental economic models indicate that life expectancy have direct impact on households’ financial choices, but this has been empirically difficult to examine. The thesis contributes with new empirical insights.
The first chapter examines how a cancer diagnosis, and the accompanying survival probability, affects saving decisions of different family structures. The empirical results show that a cancer diagnosis, regardless of survival probability, has essentially no impact on the wealth of couples. This finding indicates that couples have a strong bequest motives toward the spouse. In contrast to couples, singles tend to respond to a cancer diagnosis by reducing their wealth. However, a large part of the decrease in wealth among singles with children reflects transfers of wealth during a person’s lifetime, so-called inter vivos transfers.
The second chapter, co-authored with Trond E. Døskeland, studies whether a cancer diagnosis influences households’ risk-tolerance through their choice of asset composition. A cancer diagnosis tends to lead households to substitute risky assets for low risk assets, but the effect is small in economic magnitude. Our results show that a cancer diagnosis has no impact on the composition of financial wealth, after controlling for survival probability of the prognosis.
The third chapter, co-authored with Espen Henriksen, analyzes the relationship between oil-price changes and industry-level profitability at different horizons. Our results show that the relationship between changes in oil-prices and stock market performance can be decomposed into an unstable discount-factor component, which is highly dependent on the sample period, and a stable long-term profitability component.
12:15 in Jebsen Centre, NHH
Members of the evaluation committee:
Professor Thore Johnsen (leader of the committee), Department of Finance, NHH
Professor Kjetil Storesletten University of Oslo
Professor Pierre Collin-Dufresne, Ecole Polytechnique Federale de Lausanne
Associate Professor Trond Døskeland, Department of Business and Management Science, NHH
Associate Professor Espen Henriksen, Department of Finance, BI
The trial lecture and thesis defence will be open to the public. Copies of the thesis will be available from firstname.lastname@example.org.