Genetic Variation in Financial Decision‐Making

David Cesarini, Magnus Johannesson, Paul Lichtenstein, Orjan Sandewall and Björn Wallace

Journal of Finance, 2010, vol. 65, issue 5, 1725-1754

Abstract: Individuals differ in how they construct their investment portfolios, yet empirical models of portfolio risk typically account only for a small portion of the cross‐sectional variance. This paper asks whether genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to form a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and find that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also find that these results extend to several other aspects of financial decision‐making.

Date: 2010
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https://doi.org/10.1111/j.1540-6261.2010.01592.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:65:y:2010:i:5:p:1725-1754

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