Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets

Sandra Black, Paul Devereux, Petter Lundborg and Kaveh Majlesi

Review of Finance, 2018, vol. 22, issue 3, 951-975

Abstract: We investigate whether acquiring more primary education has long-term effects on risk-taking behavior in financial markets. Using exogenous variation in education from a compulsory schooling change combined with wealth data for the Swedish population, we estimate the effect of education on stock market participation and on the share of financial wealth invested in stocks, conditional on participation. For men, an extra year of education increases market participation by two percentage points and the share of financial wealth allocated to stocks by 10%. We find suggestive evidence that greater financial wealth is a potential channel through which education increases participation, consistent with the existence of fixed costs. Lower risk aversion is a potential channel through which education increases the stock share. The reform has less effect on female schooling attainment and there is no evidence that this additional education affects women’s asset allocation. There is no evidence of spillovers to children.

Keywords: Portfolio choice; Returns to education; Asset allocation; Risky share (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
http://hdl.handle.net/10.1093/rof/rfy005 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets (2015)
Working Paper: Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets (2015)
Working Paper: Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets (2015)
Working Paper: Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets (2015)
Working Paper: Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:revfin:v:22:y:2018:i:3:p:951-975.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Review of Finance is currently edited by Marcin Kacperczyk

More articles in Review of Finance from European Finance Association Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().