Proud to Not Own Stocks: How Identity Shapes Financial Decisions

Luca Henkel and Christian Zimpelmann

No 16246, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper introduces a key factor influencing households' decision to invest in the stock market: how people view stockholders. Using surveys we conducted with nearly 8,500 individuals from eleven countries, we document that a large 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. 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; financial decision-making (search for similar items in EconPapers)
JEL-codes: D14 D83 G41 G51 (search for similar items in EconPapers)
Pages: 101 pages
Date: 2023-06
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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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 (2022)
Working Paper: Proud to Not Own Stocks: How Identity Shapes Financial Decisions (2022)
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