From health to wealth: the impact of surviving a health crisis on individuals’ cryptocurrency investment

Purpose Do individuals take more financial risks when faced with a health crisis? This study examines the impact of COVID-19 on individuals' propensity to invest in cryptocurrencies. Design/methodology/approach We applied a probit model to the restricted version of 2021 data from the National Financial Capability Study (NFCS). We then combined propensity score matching (PSM) with an instrumental variable (IV) approach to address potential endogeneity concerns. Findings We found that individuals experiencing a health crisis, proxied by COVID-19 infection, demonstrate a significant tendency to take financial risks, proxied by investment in cryptocurrencies. Furthermore, the established link between exposure to a health risk and investing in high-risk financial products is more pronounced among individuals without financial education. Originality/value To the best of our knowledge, this investigation is the first to show how consumer health status affects the propensity to invest in cryptocurrency. We provide timely insights into how external mortality reminders drive risky financial decisions. Our main finding runs contrary to the traditional economic literature, which suggests that people maintain a certain level of risk tolerance and therefore adjust their financial investment strategies to mitigate, not exacerbate, increased risk.