Friends with Benefits: Social Capital and Financial Market Participation

Brad Cannon, David Hirshleifer and Joshua Thornton

No 32186, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using Facebook friendship data, we find that among three aspects of social capital, Economic Connectedness (EC)—the extent of cross-SES friendships—has the strongest relationship with stock market and saving participation for low-income households. One standard-deviation greater EC is associated with 3.5 percentage points greater stock market participation and 3.6 percentage points greater saving participation. Evidence from childhood friendships and an instrumental variables approach suggests that the relationship is causal. The relationship between EC and participation derives from exposure to wealthy individuals rather than from class-based friending propensities. Further results suggest that EC reduces setup costs, possibly psychic, of participation.

JEL-codes: D14 D15 D63 G4 G40 G41 G5 G50 G51 I3 I30 I31 I38 O16 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-mfd, nep-net and nep-soc
Note: AP DEV
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.nber.org/papers/w32186.pdf (application/pdf)

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:nbr:nberwo:32186

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32186

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().