Beauty and stock market participation

Hongwu Gan, Shengfeng Lu, Weijie Lu, Geng Niu and Yang Zhou

Journal of Banking & Finance, 2023, vol. 155, issue C

Abstract: This paper investigates whether beauty, an important natural endowment, affects investment decisions. Using data from the Wisconsin Longitudinal Survey (WLS), which provides a photo-based measure of facial beauty, we find that better-looking individuals are more likely to own stocks and invest a larger share of wealth in stocks. We consider a wide range of potential mediators that may drive this relationship between beauty and stock market participation. We find that income and sociability explain a large portion of the beauty effect. For both males and females, beauty has a significant positive impact on stock market participation. Using another dataset that includes the interviewer's rating of the respondent's physical attractiveness, we find similar results. Our study contributes to a better understanding of the economic returns to beauty and the source of heterogeneity in household portfolio choice.

Keywords: Beauty; Facial attractiveness; Stock market participation; Mediation analysis (search for similar items in EconPapers)
JEL-codes: D91 G11 G50 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:155:y:2023:i:c:s0378426623001929

DOI: 10.1016/j.jbankfin.2023.106994

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