Proud to Not Own Stocks: How Identity Shapes Financial Decisions

Luca Henkel () and Christian Zimpelmann
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Luca Henkel: University of Bonn

No 206, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: This paper introduces a key factor influencing households' decision to invest in the stock market: how people view stockholders. Using surveys we conducted with nearly 8,500 individuals from eleven countries, we document that a large majority of respondents view stockholders negatively - they are perceived as greedy, gambler-like, and selfish individuals. We then provide experimental evidence that such perceptions of identity-relevant characteristics causally influence decision-making: if people view stockholders more negatively, they are less likely to choose stock-related investments. Furthermore, by linking survey and administrative data, we show that negative perceptions strongly predict households’ stock market participation, more so than leading alternative determinants. Our findings provide a novel explanation for the puzzlingly low stock market participation rates around the world, new perspectives on the malleability of financial decision-making, and evidence for the importance of identity in economic decision-making.

Keywords: identity; perceptions; stock market participation; financial decision-making (search for similar items in EconPapers)
JEL-codes: D14 D83 G41 G51 (search for similar items in EconPapers)
Pages: 100 pages
Date: 2022-11
New Economics Papers: this item is included in nep-cbe and nep-hme
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_206_2022.pdf Second version, 2023 (application/pdf)

Related works:
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2023)
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2023)
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:206

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