Proud to Not Own Stocks: How Identity Shapes Financial Decisions

Luca Henkel and Christian Zimpelmann

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper introduces a key factor influencing households' decision to invest in the stock market, how people view stockholders. Using survey data from the US and the Netherlands, we first document that the overwhelming majority of respondents view stockholders negatively – they are perceived as greedy, gambler-like, and selfish individuals. We then provide experimental evidence that such perceptions of identity-relevant characteristics causally influence decision-making: if people view stockholders more negatively, they are less likely to choose stock-related investments. Furthermore, by linking survey and administrative data, we show that negative perceptions strongly predict households’ stock market participation, more so than leading alternative determinants. Beyond investment decisions, perceptions predict individuals’ polarizing behavior towards stockholders, support for taxation and regulation of financial markets, and misreporting in surveys. Our findings provide a novel explanation for the puzzlingly low stock market participation rates around the world, new perspectives on the malleability of financial decision-making, and evidence for the importance of identity in economic decision-making.

Keywords: Identity; Perceptions; Stock Market Participation; Finacial Decision-Making (search for similar items in EconPapers)
JEL-codes: D14 D83 G41 G51 (search for similar items in EconPapers)
Pages: 128
Date: 2022-12
New Economics Papers: this item is included in nep-fdg and nep-hme
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.crctr224.de/research/discussion-papers/archive/dp380 (application/pdf)

Related works:
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2023)
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2023)
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2022)
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:bon:boncrc:crctr224_2022_380

Access Statistics for this paper

More papers in CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany Kaiserstr. 1, 53113 Bonn , Germany.
Bibliographic data for series maintained by CRC Office ().