Happiness and stock market participation

Huang Wenyan

The North American Journal of Economics and Finance, 2025, vol. 80, issue C

Abstract: This study investigates the underexplored relationship between stock market participation and household happiness by analyzing microdata from the China Household Finance Survey (CHFS 2013, 2015, 2017). Our findings reveal a robust inverted U-shaped relationship between happiness and stock market participation, offering novel resolutions to three persistent puzzles in behavioral finance: the stock market participation puzzle, the happiness-income paradox, and the interplay between happiness and risk. Mechanism analysis further uncovers the multidimensional moderating role of risk through perceived risk, risk identification (social interaction, financial interest, and financial literacy), and background risk (urban–rural disparities and health status). The perceived risk significantly moderates the relationship between happiness and stock market participation. Risk identification factors operate distinctively with social interaction, amplify participation for moderately happy households, financial interest modulates participation nonlinearly, and financial literacy affects portfolio diversification. Background risks moderate the relationship between happiness and participation decisions and depth. These results provide critical empirical foundations for designing targeted financial policies that address heterogeneity in household risk dynamics and psychological well-being.

Keywords: Stock market participation; Happiness; Risk perception; Risk identification; Background risk (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062940825001317
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:80:y:2025:i:c:s1062940825001317

DOI: 10.1016/j.najef.2025.102491

Access Statistics for this article

The North American Journal of Economics and Finance is currently edited by Hamid Beladi

More articles in The North American Journal of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().