Subjective life horizon and portfolio choice

Christophe Spaenjers and Sven Michael Spira

Journal of Economic Behavior & Organization, 2015, vol. 116, issue C, 94-106

Abstract: Using data from a U.S. household survey, we examine the empirical relation between subjective life horizon (i.e., the self-reported expectation of remaining life span) and portfolio choice. We find that equity portfolio shares are higher for investors with longer horizons, controlling for gender-specific age effects, socio-economic characteristics, health, and optimism. Our result is robust to accounting for the endogeneity of equity market participation or instrumenting subjective life horizon with parental survival. Finally, we show that the effect of a shortening horizon on portfolio allocation is stronger for households without bequest motives.

Keywords: Portfolio choice; Investment horizon; Subjective expectations; Life expectancy; Bequests (search for similar items in EconPapers)
JEL-codes: D12 D14 D80 D91 G11 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Working Paper: Subjective Life Horizon and Portfolio Choice (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:116:y:2015:i:c:p:94-106

DOI: 10.1016/j.jebo.2015.04.006

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