Subjective Life Horizon and Portfolio Choice

Christophe Spaenjers and Sven Michael Spira ()

No 985, HEC Research Papers Series from HEC Paris

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, ceteris paribus, in line with theoretical predictions. This result is robust to controlling for optimism and health status, accounting for the endogeneity of equity market participation, or instrumenting subjective life horizon with parental survival. Finally, we show that bequest motives can offset the effects of a shortening horizon on portfolio allocation.

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)
Pages: 32 pages
Date: 2013-09-04
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Related works:
Journal Article: Subjective life horizon and portfolio choice (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:0985

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