Holger Kraft, Professor of Asset Pricing at Goethe University Frankfurt and Principal Investigator in SAFE, is receiving a grant by Deutsche Forschungsgemeinschaft (DFG) for a research project on “Non-financial life-cycle decisions and their impact on consumption-portfolio choice with unspanned labor income”. This project is thematically connected to the SAFE research project “Consumption-portfolio Choice with Critical Illness”.
The project studies life-cycle consumption-portfolio problems of individuals by explicitly taking unspanned labor income risk and biometric risks (mortality, morbidity) into account. Although these two sources of risk are of major importance for all households, they are typically either disregarded or at least not analyzed simultaneously. In an aging society with exploding health care costs, these issues are very relevant. The project will lead to a deeper understanding between the link of financial and non-financial decisions.