Early life conditions and financial risk–taking in older age
- Using life-history survey data from eleven European countries, we investigate whether childhood conditions, such as socioeconomic status, cognitive abilities and health problems influence portfolio choice and risk attitudes later in life. After controlling for the corresponding conditions in adulthood, we find that superior cognitive skills in childhood (especially mathematical abilities) are positively associated with stock and mutual fund ownership. Childhood socioeconomic status, as indicated by the number of rooms and by having at least some books in the house during childhood, is also positively associated with the ownership of stocks, mutual funds and individual retirement accounts, as well as with the willingness to take financial risks. On the other hand, less risky assets like bonds are not affected by early childhood conditions. We find only weak effects of childhood health problems on portfolio choice in adulthood. Finally, favorable childhood conditions affect the transition in and out of risky asset ownership, both by making divesting less likely and by facilitating investing (i.e., transitioning from non-ownership to ownership).
Author: | Dimitris Christelis, Loretti I. Dobrescu, Alberto Motta |
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URN: | urn:nbn:de:hebis:30:3-241128 |
Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2011,28 |
Series (Serial Number): | CFS working paper series (2011, 28) |
Publisher: | Goethe-Univ., House of Finance, Center for Financial Studies |
Place of publication: | Frankfurt am Main |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2011 |
Year of first Publication: | 2011 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2012/02/07 |
Tag: | Childhood; Cognition; Financial Risk; Health; Portfolio Choice; Socioeconomic Status |
Issue: | September 28, 2011 |
Page Number: | 44 |
HeBIS-PPN: | 31219966X |
Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
JEL-Classification: | C Mathematical and Quantitative Methods / C2 Single Equation Models; Single Variables / C23 Models with Panel Data |
C Mathematical and Quantitative Methods / C2 Single Equation Models; Single Variables / C25 Discrete Regression and Qualitative Choice Models; Discrete Regressors (Updated!) | |
Licence (German): | Deutsches Urheberrecht |