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Household Portfolio Choice, Reference Dependence, and the Marriage Market

Author

Listed:
  • Li, Wenchao

    (National University of Singapore)

  • Song, Changcheng

    (National University of Singapore)

  • Xu, Shu

    (Southwestern University of Finance and Economics)

  • Yi, Junjian

    (Peking University)

Abstract

This paper bridges the financial market and the marriage market using a reference-dependent mechanism. Male-biased sex ratios induce families with sons to hold more risky assets, since competitive marital payment in a tight market raises the reference level of marriage expenditure for such families. Using the 2013 China Household Finance Survey data, we find that a 0.1 increase in the sex ratio raises the probability of participating in the stock market by 25.7 percent, or the stock share of liquid wealth by 42.7 percent for families with a son; there appears no effect for families with a daughter.

Suggested Citation

  • Li, Wenchao & Song, Changcheng & Xu, Shu & Yi, Junjian, 2017. "Household Portfolio Choice, Reference Dependence, and the Marriage Market," IZA Discussion Papers 10528, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10528
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    More about this item

    Keywords

    difference-in-differences estimate; sex-ratio imbalance; prospect theory; reference dependence; household portfolio choice;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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