Behavioral Aspects Of Household Portfolio Choice
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Behavioral Aspects Of Household Portfolio Choice
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Author : In Do Hwang
language : en
Publisher:
Release Date : 2017
Behavioral Aspects Of Household Portfolio Choice written by In Do Hwang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This paper investigates how loss-aversion affects individuals' decisions on savings and insurance purchase. Specifically, this paper empirically tests if prospect theory's loss aversion decreases insurance demand and increases savings demand. Prospect theory predicts that boundedly rational consumers may view pure protection insurance, such as term-life insurance, as a risky investment because the insured may lose premiums if a bad event does not occur within the pre-specified term. Hence, those who are fairly sensitive to the potential loss choose not to buy term-life insurance. Instead, they may choose a more safe option to prepare for uncertain future events by increasing precautionary saving. This paper tests such prediction using individual-level data from the Health and Retirement Study (HRS) and finds empirical evidence consistent with the prediction: loss-averse individuals are less likely to own term-life insurance and more likely to own whole-life insurance, which serves as a partial savings instrument. These individuals also hold a higher level of wealth than others, suggesting that they tend to save more (presumably for precautionary motives), all other things being equal.
Household Portfolio Choice The Influence Of Risk Preferences And Early Life Experiences
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Author : Jian Li
language : en
Publisher:
Release Date : 2014
Household Portfolio Choice The Influence Of Risk Preferences And Early Life Experiences written by Jian Li and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Ambiguity Aversion And Household Portfolio Choice
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Author :
language : en
Publisher:
Release Date : 2013
Ambiguity Aversion And Household Portfolio Choice written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
Ambiguity Aversion And Household Portfolio Choice
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Author : Stephen G. Dimmock
language : en
Publisher:
Release Date : 2013
Ambiguity Aversion And Household Portfolio Choice written by Stephen G. Dimmock and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
We test the relation between ambiguity aversion and five household portfolio choice puzzles: non- participation, low allocations to equity, home-bias, own-company stock ownership, and portfolio under- diversification. In a representative U.S. household survey, we measure ambiguity aversion using custom- designed questions based on Ellsberg urns. As theory predicts, ambiguity aversion is negatively associated with stock market participation, the fraction of financial assets in stocks, and foreign stock ownership, but positively related to own-company stock ownership. Conditional on stock ownership, ambiguity aversion is related to portfolio under-diversification, and during the financial crisis, ambiguity-averse respondents were more likely to sell stocks.
Household Saving Behavior Portfolio Choice And Children
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Author : Tansel Yilmazer
language : en
Publisher:
Release Date : 2002
Household Saving Behavior Portfolio Choice And Children written by Tansel Yilmazer and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with categories.
Towards An Explanation Of Household Portfolio Choice Heterogeneity
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Author : Annette Vissing-Jorgensen
language : en
Publisher:
Release Date : 2002
Towards An Explanation Of Household Portfolio Choice Heterogeneity written by Annette Vissing-Jorgensen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Economics categories.
The paper uses micro data on income and asset holdings from the Panel Study of Income Dynamics and other US household level data sets to analyze reasons for nonparticipation in the stock market and for heterogeneity in portfolio choice within the set of stock market participants. I find evidence of a positive effect of mean nonfinancial income on the probability of stock market participation and on the proportion of wealth invested in stocks conditional on being a participant. The volatility of nonfinancial income is found to have a negative impact on these two quantities. However, there is no evidence of an effect of the correlation of nonfinancial income with the stock market return on portfolio choice. Three different costs of stock market participation are considered, a fixed transactions cost, a proportional transactions cost, and a per period participation cost. I find evidence of structural state dependence in the stock market participation decision supporting the importance of fixed transactions costs. This is supported by findings of higher trading frequencies for high wealth households. Based on a simple model of the benefits of stock market participation I estimate that a per period stock market participation cost of just 50 dollars is sufficient to explain the choices of half of stock market nonparticipants
Behavioral Biases And Portfolio Choice
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Author : Massimo Massa
language : en
Publisher:
Release Date : 2003
Behavioral Biases And Portfolio Choice written by Massimo Massa and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
We investigate the way investors react to prior gains/losses and the so called quot;familiarityquot; bias. We use a new and unique dataset with detailed information on investors' various components of wealth, income, demographic characteristics and portfolio holdings identified at the stock level. We distinguish between different behavioral theories (loss aversion, house-money effect) and between behavioral and rational hypotheses (pure familiarity and information-based familiarity). We show that, on a yearly horizon, investors react to previous gains/losses according to the house-money effect. In terms of individual stock picking, we provide evidence in favor of the information-based theory and show that familiarity can be considered as a proxy for the availability of information as opposed to behavioral heuristics.
Essays On Household Portfolio Choice
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Author : Derya Tas
language : en
Publisher:
Release Date : 2011
Essays On Household Portfolio Choice written by Derya Tas and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Ambiguity Aversion And Household Portfolio Choice Puzzles
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Author : Stephen G. Dimmock
language : en
Publisher:
Release Date : 2016
Ambiguity Aversion And Household Portfolio Choice Puzzles written by Stephen G. Dimmock and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
We test the relation between ambiguity aversion and five household portfolio choice puzzles: non-participation in equities, low allocations to equity, home-bias, own-company stock ownership, and portfolio under-diversification. In a representative U.S. household survey, we measure ambiguity preferences using custom-designed questions based on Ellsberg urns. As theory predicts, ambiguity aversion is negatively associated with stock market participation, the fraction of financial assets in stocks, and foreign stock ownership, but it is positively related to own-company stock ownership. Conditional on stock ownership, ambiguity aversion is related to portfolio under-diversification, and during the financial crisis, ambiguity-averse respondents were more likely to sell stocks.
Portfolio Choice And Mental Health
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Author : Vicki L. Bogan
language : en
Publisher:
Release Date : 2014
Portfolio Choice And Mental Health written by Vicki L. Bogan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Close to 30 percent of the U.S. population experiences at least one mental or substance abuse disorder each year. Given the prevalence of mental health issues, this paper analyzes the role of mental health and cognitive functioning in household portfolio choice decisions. Generally, we find that households affected by mental health issues decrease investments in risky instruments. Various mental health issues can reduce the probability of holding risky assets by up to 19 percent. Moreover, single women diagnosed with psychological disorders increase investments in safe assets. We also find that cognitive functioning issues are associated with an increase in financial assets devoted to retirement accounts.