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Cognitive Abilities and Portfolio Choice

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Author Info
Christelis, Dimitris
Jappelli, Tullio
Padula, Mario

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Abstract

We study the relation between cognitive ability and the decision to invest in stocks using the recent Survey of Health, Ageing and Retirement in Europe (SHARE). The survey has detailed data on wealth and portfolio composition of individuals aged 50+ in 11 European countries and three indicators of cognitive abilities: mathematical, verbal fluency, and recall skills. We find that the propensity to invest in stocks is strongly associated with cognitive abilities, for both direct stock market participation and indirect participation through mutual funds and investment accounts. We also find that stockholding increases with social interactions, intention to leave a bequest, and is negatively associated with health status.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5735.

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Date of creation: Jul 2006
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Handle: RePEc:cpr:ceprdp:5735

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Keywords: cognitive abilities portfolio choice stockholding

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Find related papers by JEL classification:
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
G1 - Financial Economics - - General Financial Markets

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References listed on IDEAS
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Full references

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. Maarten van Rooij & Annamaria Lusardi & Rob Alessie, 2007. "Financial Literacy and Stock Market Participation," Working Papers 07-23, Utrecht School of Economics. [Downloadable!]
    Other versions:
  2. Ciro Avitabile & Tullio Jappelli & Mario Padula, 2008. "Screening Tests, Information, and the Health-Education Gradient," CSEF Working Papers 187, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy, revised 28 Apr 2008. [Downloadable!]
  3. Joerg Oechssler & Andreas Roider & Patrick W. Schmitz, 2008. "Cognitive Abilities and Behavioral Biases," Working Papers 0465, University of Heidelberg, Department of Economics, revised May 2008. [Downloadable!]
    Other versions:
  4. Dimitrios Christelis & Dimitris Georgarakos & Michael Haliassos, 2008. "Economic Integration and Mature Portfolios," CSEF Working Papers 194, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy. [Downloadable!]
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