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Portfolio decisions and perceived racial discrimination

Author

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  • Bucciol, Alessandro
  • Papadovasilaki, Dimitra

Abstract

We use data from the US Health and Retirement Study to examine the relationship between individual portfolio decisions and perceived discrimination, with a focus on racial discrimination. We show that sensing racial discrimination has a bigger association with shaping portfolio decisions than any other type of discrimination. Perceived racial discrimination is correlated not only with the choice to opt-in risky financial assets, but also the amount of assets held. Specifically, racial discrimination is associated with reducing the probability of holding risky assets by 4.0% and reducing the amount of these holdings by 4.2%. Most of the respondents who report being racially discriminated against, are non-White, and thus such experiences add to the racial wealth inequality.

Suggested Citation

  • Bucciol, Alessandro & Papadovasilaki, Dimitra, 2023. "Portfolio decisions and perceived racial discrimination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 106(C).
    • Handle: RePEc:eee:soceco:v:106:y:2023:i:c:s2214804323000885
    DOI: 10.1016/j.socec.2023.102062
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    More about this item

    Keywords

    Discrimination; Race; Financial risk taking; Wealth inequality; Behavioral finance;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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