This seminar is based on a paper co-authored by Matija Kovacic, Juliana Bernhofer? and Francesco Costantini.

This paper explores the relationship between linguistic variation and individual attitudes toward uncertainty and risky behavior. According to linguistic relativity hypothesis, linguistic differences in grammatical structure may induce speakers of different languages to conceptualize and experience the world differently. We develop a specific linguistic marker that classifies languages according to the number of non-indicative moods in irrealis contexts in their respective grammars. These grammatical categories are concerned with the expression of situations involving uncertainty, and the frequency of their use may be closely related to the overall degree of uncertainty perceived by individuals. Using data from the Survey of Health, Aging and Retirement in Europe (SHARE) and World Value Survey (WVS), we show that speakers of languages where non-indicative moods are used more intensively are on average more risk averse. Linguistic markers are then used to instrument the individual attitudes toward risk in order to quantify a direct causal effect of risk aversion on the propensity to invest in risky financial assets. We show that higher risk aversion causes a significantly lower propensity to invest in risky assets.