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Are Economists More Likely to Hold Stocks?

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Author Info
Charlotte Christiansen
Juanna Schröter Joensen
Jesper Rangvid () (School of Economics and Management, University of Aarhus, Denmark and CREATES)

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Abstract

A large register-based panel data set containing detailed information on educational attainments as well as financial and socioeconomic variables for individual investors enables us to test the hypothesis that due to informational advantages economists are more likely to hold stocks than otherwise identical investors. Firstly, we consider the change in stockholdings associated with (i) completing an economics education and (ii) an economist moving into the household. Secondly, we model the stock market participation decision by a probit model with unobserved individual heterogeneity. This model allows us to control for both observable and unobservable investor characteristics. Thirdly, instrumental variables estimation allows us to identify the causal effect of an economics education on stock market participation for individuals who are induced to acquire an economics education due to a university opening. Throughout, we focus explicitly on the effect of a change in educational status on the likelihood of holding stocks. Our overall result is that economists have a significantly higher probability of participating in the stock market than investors with any other education. This result is shown to be highly robust. Finally, we find that economists hold more stocks value-wise than similar investors with other educational backgrounds.

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Paper provided by School of Economics and Management, University of Aarhus in its series CREATES Research Papers with number 2007-08.

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Length: 43
Date of creation: 15 May 2007
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Handle: RePEc:aah:create:2007-08

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Related research
Keywords: Investor Education; Portfolio Choice; Stock Market Participation;

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Find related papers by JEL classification:
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
I29 - Health, Education, and Welfare - - Education - - - Other
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Charlotte Christiansen & Juanna Schröter Joensen, 2006. "The Risk-Return Trade-Off in Human Capital Investment," Economics Working Papers 2006-02, School of Economics and Management, University of Aarhus. [Downloadable!]
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