External Seminar by Werner De Bondt

When
21-06-2019 from 11:30 to 12:45
Where
Class room 0.1, Sint-Pietersplein7, ground floor
Language
English
Organizer
Department of Economics
Contact
economics.seminars@ugent.be
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Title: The Risk Tolerance of Couples and Stock Market Participation

Werner De Bondt (DePaul University, Chicago),

Please register by Tuesday 18 June at https://doodle.com/poll/xw6b39tqb4pi7uyg.

Abstract:

Persistent discrepancies in values and beliefs with respect to financial matters, i.e., incompatible “money personalities,” can be a source of discord in families. Here, we analyze risky asset allocation choices made by 2,382 traditional husband-wife couples in the Netherlands (1993-2016) with an emphasis on partner effects. Husband and wife constantly interact and influence one another. Yet, family choices ordinarily also reflect the unique viewpoints of each spouse. We describe similarities and differences in risk attitudes, financial literacy, age, and education among Dutch couples. We observe that, in the cross-section of households, the judgment to hold stocks or mutual funds is not only related to the partners’ average risk tolerance, or average level of financial knowledge, or average age, but importantly also to the dissimilarities and gaps between them. The strength of the various effects depends partially on “who is in charge.” Further, if households rely on professional investment advice, they are more likely to own mutual funds and to expand the equity portions of their portfolios. But neither professional nor personal advice offered by family and friends, ostensibly working in the opposite direction, modify the central findings.

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