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Dispositional optimism and stock investments

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  • Angelini, Viola
  • Cavapozzi, Danilo

Abstract

This paper analyzes the relationship between dispositional optimism and stock investments, controlling for cognitive skills and personality traits such as trust, social interactions and risk aversion. We use data from the Survey of Health, Ageing and Retirement in Europe (SHARE) on investors aged 50+ in twelve European countries. Our results show that dispositional optimism and personality matter for financial decisions. Optimism is positively and significantly related to both the ownership of stocks and the share of gross financial wealth invested in these assets and its role is especially relevant for risk tolerant investors and investors with little trust in others.

Suggested Citation

  • Angelini, Viola & Cavapozzi, Danilo, 2017. "Dispositional optimism and stock investments," Journal of Economic Psychology, Elsevier, vol. 59(C), pages 113-128.
    • Handle: RePEc:eee:joepsy:v:59:y:2017:i:c:p:113-128
    DOI: 10.1016/j.joep.2017.01.006
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    Cited by:

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    2. Despina Gavresi & Anastasia Litina & Christos A. Makridis, 2021. "Split Personalities? Behavioral Effects of Temperature on Financial Decision-making," Discussion Paper Series 2021_16, Department of Economics, University of Macedonia, revised Nov 2021.
    3. Grevenbrock, Nils, 2020. "Dispositional optimism (and pessimism), wealth, and stock market participation," Journal of Economic Psychology, Elsevier, vol. 81(C).
    4. Claus, Edda & Nguyen, Viet Hoang, 2023. "Biased expectations," European Economic Review, Elsevier, vol. 154(C).
    5. Angelini, Viola & Bertoni, Marco & Stella, Luca & Weiss, Christoph T., 2019. "The ant or the grasshopper? The long-term consequences of Unilateral Divorce Laws on savings of European households," European Economic Review, Elsevier, vol. 119(C), pages 97-113.
    6. Jamel Khenfer, 2022. "How Materialism Shapes the Effectiveness of Financial Literacy Messages: A Cross‐Cultural Perspective," Post-Print hal-03528697, HAL.
    7. Thomas Dohmen & Simone Quercia & Jana Willrodt, 2023. "On the psychology of the relation between optimism and risk taking," Journal of Risk and Uncertainty, Springer, vol. 67(2), pages 193-214, October.
    8. Ela Ostrovsky-Berman & Howard Litwin, 2019. "Social Network and Financial Risk Tolerance Among Investors Nearing and During Retirement," Journal of Family and Economic Issues, Springer, vol. 40(2), pages 237-249, June.
    9. Choung, Youngjoo & Chatterjee, Swarn & Pak, Tae-Young, 2022. "Depression and financial planning horizon," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).

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    More about this item

    Keywords

    Dispositional optimism; Household finance; Saving behavior;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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