Molecular Genetics, Risk Aversion, Return Perceptions, and Stock Market Participation

Richard Sias, Laura Starks and Harry J. Turtle

No 27638, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that molecular variation in DNA related to cognition, personality, health, and body shape, predicts an individual’s equity market participation and risk aversion. Moreover, the molecular genetic endowments predict individuals’ return perceptions, most of which we find to be strikingly biased. The genetic endowments also strongly associate with many of the investor characteristics (e.g., trust, sociability, wealth) shown to explain heterogeneity in equity market participation. Our analysis helps elucidate why financial choices are heritable and how genetic endowments can help explain the links between financial choices, risk aversion, beliefs, and other variables known to explain stock market participation.

JEL-codes: D87 G11 G41 G51 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-evo, nep-fmk, nep-ore and nep-upt
Note: AP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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