The Effects of Marriage and Divorce on Financial Investments: Learning to Love or Hate Risk?
AbstractWe investigate how changes in marital status affect the decision to take on financial risks. As an alternative to the traditional approach of comparing different groups of investors (men and women) at each point in time, we use a difference-in-differences estimation strategy to compare how the same individual invests at different points in time (before and after marriage or divorce) compared to a benchmark investor, thereby controlling for unobserved systematic differences as well as various background characteristics. We investigate both the propensity to participate in the stock market and the propensity to invest in more risky portfolios. We find that marriage acts as a financial risk-reducer for men and as a financial risk-increaser for women, in the sense that women increase the fraction of wealth invested in stocks after marriage and decrease it after divorce, whereas men show the opposite investment behavior.
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Bibliographic InfoPaper provided by School of Economics and Management, University of Aarhus in its series CREATES Research Papers with number 2010-57.
Date of creation: 01 Sep 2010
Date of revision:
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Web page: http://www.econ.au.dk/afn/
Gender; Marriage; Divorce; Difference-in-differences; Stock market participation; Portfolio choice.;
Find related papers by JEL classification:
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
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- Vincenzo Atella & Marianna Brunetti & Nicole Maestas, 2011.
"Household Portfolio Choices, Health status and Health Care Systems A Cross-Country Analysis Based on SHARE,"
CEIS Research Paper
183, Tor Vergata University, CEIS, revised 21 Jan 2011.
- Atella, Vincenzo & Brunetti, Marianna & Maestas, Nicole, 2012. "Household portfolio choices, health status and health care systems: A cross-country analysis based on SHARE," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1320-1335.
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