Portfolio decisions and perceived racial discrimination

Alessandro Bucciol and Dimitra Papadovasilaki

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2023, vol. 106, issue C

Abstract: We use data from the US Health and Retirement Study to examine the relationship between individual portfolio decisions and perceived discrimination, with a focus on racial discrimination. We show that sensing racial discrimination has a bigger association with shaping portfolio decisions than any other type of discrimination. Perceived racial discrimination is correlated not only with the choice to opt-in risky financial assets, but also the amount of assets held. Specifically, racial discrimination is associated with reducing the probability of holding risky assets by 4.0% and reducing the amount of these holdings by 4.2%. Most of the respondents who report being racially discriminated against, are non-White, and thus such experiences add to the racial wealth inequality.

Keywords: Discrimination; Race; Financial risk taking; Wealth inequality; Behavioral finance (search for similar items in EconPapers)
JEL-codes: D14 D81 G11 G41 J71 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:106:y:2023:i:c:s2214804323000885

DOI: 10.1016/j.socec.2023.102062

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