EconPapers    
Economics at your fingertips  
 

Windfall Gains and Stock Market Participation

Joseph Briggs (), David Cesarini (), Erik Lindqvist () and Robert Östling ()

No 1092, Working Paper Series from Research Institute of Industrial Economics

Abstract: We estimate the causal effect of wealth on stock market participation using administrative data on Swedish lottery players. A $150,000 windfall gain increases stock ownership probability among pre-lottery non-participants by 12 percentage points, while pre-lottery stock holders are unaffected. The effect is immediate, seemingly permanent and heterogeneous in intuitive ways. Standard lifecycle models predict wealth effects far too large to match our causal estimates under common calibrations. Additional analyses suggest a limited role for explanations such as procrastination or real-estate investment. Overall, results suggest that "nonstandard" beliefs or preferences contribute to the nonparticipation of households across many demographic groups.

Keywords: Stock market participation; Portfolio choice; Household finance (search for similar items in EconPapers)
JEL-codes: D10 G02 G11 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-10-28
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11) Track citations by RSS feed

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp1092.pdf (application/pdf)

Related works:
Journal Article: Windfall gains and stock market participation (2021) Downloads
Working Paper: Windfall Gains and Stock Market Participation (2015) Downloads
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:hhs:iuiwop:1092

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().

 
Page updated 2021-04-08
Handle: RePEc:hhs:iuiwop:1092