Review of Financial Studies Vol. 36 No. 4 2023

The Disutility of Stock Market Losses: Evidence From Domestic Violence

Tse-Chun Lin¹; Vesa Pursiainen²

¹ University of Hong Kong, China and National Taiwan University , Taiwan · ² University of St. Gallen and Swiss Finance Institute , Switzerland

Abstract

Stock returns during the week are negatively associated with the reported incidence of domestic violence during the weekend. This relationship is primarily driven by negative returns. The incidence of domestic violence increases with the magnitude of losses, and the effect increases with local stock market participation. Our findings suggest that negative wealth shocks caused by stock market crashes can affect stress levels within intimate relationships, escalate arguments, and trigger domestic violence. Stock market losses may reduce household utility beyond the shock to financial wealth, supporting gain-loss models where disutility from losses outweighs the utility from gains of a similar magnitude.

DOI

10.1093/rfs/hhac049

Volume

36

Issue

4

Pages

1703-1736

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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