Seasonal affective disorder (SAD) makes people avoid risk in fall and winter

This is your portfolio on winter: seasonal affective disorder and risk aversion in financial decision making

From Social Psychological and Personality Science 

About 10 percent of the population suffers from severe seasonal depression, known as seasonal affective disorder (SAD). However evidence suggests even those who do not suffer from the medical condition of SAD still experience some degree of seasonal fluctuation in mood. This study shows that people who experience seasonal depression shun financial risk-taking during seasons with diminished daylight but are more willing to accept risk in spring and summer. The researchers based their findings on a study of faculty and staff at a large North American university. Participants were paid for each part of the study they joined, which included online surveys and behavioural assessments. They also had the option of putting some or all of their payment into an investment with 50:50 odds and where the potential gains exceeded the potential losses, to mimic financial risk. Participants who experienced seasonal depression chose more of the guaranteed payments and put less money at risk in winter, but their risk tolerance came more into line with other participants’ in summer. The findings have implications for people like financial planners who may need to be more sensitive to seasonal variation in their clients’ risk tolerance. Stock traders may also benefit from understanding where their reactions are coming from when dealing with a bad trading day. The author concludes “It’s important to take a deep breath and make sure that decisions are being made on the basis of objective criteria, rather than emotional criteria”.


This study found that people who suffer from seasonal affective disorder (SAD) displayed financial risk aversion that varied across the seasons as a function of seasonally changing affect. The SAD-sufferers had significantly stronger preferences for safe choices during the winter than non-SAD-sufferers, and they did not differ from non-SAD-sufferers during the summer. The effect of SAD on risk aversion in the winter was mediated by depression.

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Article details
Kramer, L., & Weber, J. (2011). This is Your Portfolio on Winter: Seasonal Affective Disorder and Risk Aversion in Financial Decision Making Social Psychological and Personality Science DOI: 10.1177/1948550611415694

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