This dissertation explores how subjective beliefs of households are formed and how these beliefs affect households’ financial decision making and beyond. The first chapter of this dissertation demonstrates a causal relationship between mortality beliefs and households’ saving and consumption decisions. The second chapter establishes the novel fact that households severely overestimate their subjective labor income disaster risk. Subsequently, it is shown empirically and theoretically that this leads to a reduced willingness to invest into stocks. The final chapter of this dissertation explores whether subjective labor income risk affects the likelihood of voting for populist parties.
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