Do Role Models Affect Risk-Taking Behavior? The Case of Minorities
Sarah Khalaf and
No 14264, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We show that social changes, like the success of role models, affects household financial decisions. Specifically, President Obama is a role model for minorities. Minorities historically underinvest in equity, which contributes to the widening racial wealth gap. Obama's election in 2008 is a positive social change for minorities that should encourage investing. Indeed, post-2008 and compared to White Americans, minorities, have a higher propensity to increase risk tolerance and to increase allocations to risky assets and savings, a lower propensity to exit the market, and trade more often. Overall, we show that societal factors affect the racial stock ownership gap.
Keywords: asset allocation; PSID; Savings; SCF; Stock ownership; Trading; wealth gap (search for similar items in EconPapers)
JEL-codes: D14 G11 J15 J16 (search for similar items in EconPapers)
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