The Obama Effect: Heightened Risk Tolerance, Optimism, and Wealth Accumulation by Minorities after 2008

Yosef Bonaparte, Sarah Khalaf and George Korniotis

No 14264, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the financial behavior of minorities over 2007-09. We find that after 2008 and compared to whites, African Americans and Hispanics have a higher propensity to increase risk tolerance, optimism, and allocations to risky assets and lower probability of exiting the stock market. These findings cannot be explained by changes in wealth or income, and we ascribe them to the positive effects of President Obama who is a role model for minorities. Specifically, we find that the change in behavior by minorities is consistent with minorities updating their beliefs about future economic outcomes.

Keywords: Risk tolerance; Optimism; Stock ownership; Asset allocation; Wealth gap; Scf; Presidential elections (search for similar items in EconPapers)
JEL-codes: D14 G11 J15 (search for similar items in EconPapers)
Date: 2022-05
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