Stock holdings over the life cycle: Who hesitates to join the market?

Linwan Zhang, Weixing Wu, Ying Wei and Rulu Pan

Economic Systems, 2015, vol. 39, issue 3, 423-438

Abstract: In this paper, we study the empirical relationship between age and individual wealth held in stocks, focusing on the heterogeneity of risk-taking over the life cycle in the population. We use micro-data and nonparametric quantile regression to argue that there is a pronounced life cycle pattern of risk-taking for households, which is conditional upon ownership. Specifically, we show that the fraction of stock investment decreases to bottom significantly in midlife and increases afterwards, contradicting the popular evidence claiming a hump-shaped pattern. The pressure of large financial obligations during middle age may be the reason for the crowding out of stock market risk-taking and could induce low capital returns for households.

Keywords: Life cycle; Stock market participation; Targeting; Nonparametric quantile regression; Raking (search for similar items in EconPapers)
JEL-codes: D12 E21 G11 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:39:y:2015:i:3:p:423-438

DOI: 10.1016/j.ecosys.2015.05.001

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