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No pain, no gain? Household beliefs and stock market participation

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  • Gao, Ming

Abstract

This paper investigates whether household beliefs on the determinants of success affect their stock market participation decisions. Using national survey data from China, I show that Chinese households believe that personal effort is the most influential factor in people’s success, followed by family social connections, aptitude, and luck. Moreover, households that believe more in effort are less likely to participate in the stock market, while those who place more emphasis on family social connections are more likely to participate. The negative (positive) effects of effort (family social connections) are more profound for agricultural (workplace-affiliated) households. Further, I offer belief mechanisms to explain the heterogeneity of stock market participation for different occupations.

Suggested Citation

  • Gao, Ming, 2019. "No pain, no gain? Household beliefs and stock market participation," Economics Letters, Elsevier, vol. 181(C), pages 81-84.
    • Handle: RePEc:eee:ecolet:v:181:y:2019:i:c:p:81-84
    DOI: 10.1016/j.econlet.2019.05.001
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    References listed on IDEAS

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    1. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Trusting the Stock Market," Journal of Finance, American Finance Association, vol. 63(6), pages 2557-2600, December.
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    3. Gao, Ming & Fok, Robert (Chi-Wing), 2015. "Demographics, family/social interaction, and household finance," Economics Letters, Elsevier, vol. 136(C), pages 194-196.
    4. Conlin, Andrew & Kyröläinen, Petri & Kaakinen, Marika & Järvelin, Marjo-Riitta & Perttunen, Jukka & Svento, Rauli, 2015. "Personality traits and stock market participation," Journal of Empirical Finance, Elsevier, vol. 33(C), pages 34-50.
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    More about this item

    Keywords

    Household beliefs; Personal effort; Family social connections; Stock market participation;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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