IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article

Portfolio Choice and Mental Health

  • Vicki L. Bogan
  • Angela R. Fertig
Registered author(s):

    Close to 30% of the US population experiences at least one mental or substance abuse disorder each year. Given the prevalence of mental health issues, this paper analyzes the role of mental health and cognitive functioning in household portfolio choice decisions. Generally, we find that households affected by mental health issues decrease investments in risky instruments. Various mental health issues can reduce the probability of holding risky assets by up to 19%. Moreover, single women diagnosed with psychological disorders increase investments in safe assets. We also find that cognitive functioning issues are associated with an increase in financial assets devoted to retirement accounts. Copyright 2013, Oxford University Press.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://hdl.handle.net/10.1093/rof/rfs016
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by European Finance Association in its journal Review of Finance.

    Volume (Year): 17 (2013)
    Issue (Month): 3 ()
    Pages: 955-992

    as
    in new window

    Handle: RePEc:oup:revfin:v:17:y:2013:i:3:p:955-992
    Contact details of provider: Postal:
    Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK

    Fax: 01865 267 985
    Web page: http://rof.oxfordjournals.org/
    Email:


    More information through EDIRC

    Order Information: Web: http://www.oup.co.uk/journals

    References listed on IDEAS
    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.:

    as in new window
    1. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2008. "Cognitive abilities and portfolio choice," CFS Working Paper Series 2008/35, Center for Financial Studies (CFS).
    2. Bretteville-Jensen, A.L., 1999. "Addiction and Discounting," Norway; Department of Economics, University of Bergen 198, Department of Economics, University of Bergen.
    3. Lundberg, Shelly & Startza, Richard & Stillman, Steven, 2003. "The retirement-consumption puzzle: a marital bargaining approach," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1199-1218, May.
    4. W. David Bradford & James Zoller & Gerard A. Silvestri, 2010. "Estimating the Effect of Individual Time Preferences on the Use of Disease Screening," Southern Economic Journal, Southern Economic Association, vol. 76(4), pages 1005-1031, April.
    5. Fan, Elliott & Zhao, Ruoyun, 2009. "Health status and portfolio choice: Causality or heterogeneity?," Journal of Banking & Finance, Elsevier, vol. 33(6), pages 1079-1088, June.
    6. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
    7. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    8. Paul A. Smith & David A. Love, 2007. "Does health affect portfolio choice?," Finance and Economics Discussion Series 2007-45, Board of Governors of the Federal Reserve System (U.S.).
    9. Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S164-S187, February.
    10. Ryan D. Edwards, 2010. "Optimal portfolio choice when utility depends on health," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(2), pages 205-225.
    11. Brad M. Barber & Terrance Odean, 2001. "Boys will be Boys: Gender, Overconfidence, and Common Stock Investment," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 261-292.
    12. John Heaton & Deborah Lucas, 2000. "Portfolio Choice and Asset Prices: The Importance of Entrepreneurial Risk," Journal of Finance, American Finance Association, vol. 55(3), pages 1163-1198, 06.
    13. Kochar, Anjini, 2004. "Ill-health, savings and portfolio choices in developing economies," Journal of Development Economics, Elsevier, vol. 73(1), pages 257-285, February.
    14. Frederick J. Zimmerman & Wayne Katon, 2005. "Socioeconomic status, depression disparities, and financial strain: what lies behind the income-depression relationship?," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1197-1215.
    15. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    16. David Love, 2008. "The Effect of Marital Status and Children on Savings and Portfolio Choice," Department of Economics Working Papers 2008-13, Department of Economics, Williams College.
    17. Bretteville-Jensen, A. L., 1999. "Addiction and discounting1," Journal of Health Economics, Elsevier, vol. 18(4), pages 393-407, August.
    18. Kelly, Patrick J. & Meschke, Felix, 2010. "Sentiment and stock returns: The SAD anomaly revisited," Journal of Banking & Finance, Elsevier, vol. 34(6), pages 1308-1326, June.
    19. Fehr-Duda, Helga & Epper, Thomas & Bruhin, Adrian & Schubert, Renate, 2011. "Risk and rationality: The effects of mood and decision rules on probability weighting," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 14-24.
    20. Haliassos, Michael & Christelis, Dimitris & Georgarakos, Dimitris, 2010. "Stockholding: Participation, Location, and Spillovers," MEA discussion paper series 10208, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
    21. Berkowitz, Michael K. & Qiu, Jiaping, 2006. "A further look at household portfolio choice and health status," Journal of Banking & Finance, Elsevier, vol. 30(4), pages 1201-1217, April.
    22. Richard Thaler & Shlomo Benartzi, 2004. "Save more tomorrow: Using behavioral economics to increase employee saving," Natural Field Experiments 00337, The Field Experiments Website.
    23. Harrison Hong & Jeffrey D. Kubik & Jeremy C. Stein, 2004. "Social Interaction and Stock-Market Participation," Journal of Finance, American Finance Association, vol. 59(1), pages 137-163, 02.
    24. Attila Cseh*, 2008. "The Effects of Depressive Symptoms on Earnings," Southern Economic Journal, Southern Economic Association, vol. 75(2), pages 383-409, October.
    25. Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 729-758.
    26. Fletcher Jason, 2009. "All in the Family: Mental Health Spillover Effects between Working Spouses," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-21, February.
    27. Browning, Martin, 2000. " The Saving Behaviour of a Two-Person Household," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 235-51, June.
    28. Mark Kamstra & Lisa Kramer & Maurice D. Levi, 2002. "Winter blues: a SAD stock market cycle," FRB Atlanta Working Paper 2002-13, Federal Reserve Bank of Atlanta.
    29. Rachel Croson & Uri Gneezy, 2009. "Gender Differences in Preferences," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 448-74, June.
    30. Rosen, H.S.Harvey S. & Wu, Stephen, 2004. "Portfolio choice and health status," Journal of Financial Economics, Elsevier, vol. 72(3), pages 457-484, June.
    31. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
    32. Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," ILR Review, Cornell University, ILR School, vol. 51(1), pages 64-81, October.
    33. Li-Wei Chao & Helena Szrek & Nuno Sousa Pereira & Mark V. Pauly, 2007. "Time Preference and Its Relationship with Age, Health, and Survival Probability," CEF.UP Working Papers 0706, Universidade do Porto, Faculdade de Economia do Porto.
    34. Carol C. Bertaut, 1998. "Stockholding Behavior Of U.S. Households: Evidence From The 1983-1989 Survey Of Consumer Finances," The Review of Economics and Statistics, MIT Press, vol. 80(2), pages 263-275, May.
    35. Kirchler, Erich & Hoelzl, Erik & Kamleitner, Bernadette, 2008. "Spending and credit use in the private household," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(2), pages 519-532, April.
    36. Bartel, Ann & Taubman, Paul, 1986. "Some Economic and Demographic Consequences of Mental Illness," Journal of Labor Economics, University of Chicago Press, vol. 4(2), pages 243-56, April.
    37. Susan L. Ettner & Richard G. Frank & Ronald C. Kessler, 1997. "The Impact of Psychiatric Disorders on Labor Market Outcomes," NBER Working Papers 5989, National Bureau of Economic Research, Inc.
    38. Jianakoplos, Nancy Ammon & Bernasek, Alexandra, 1998. "Are Women More Risk Averse?," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 620-30, October.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:oup:revfin:v:17:y:2013:i:3:p:955-992. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)

    or (Christopher F. Baum)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.