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Social Interaction and Stock Market Participation: Evidence from British Panel Data

  • Sarah Brown

    ()

    (Department of Economics, The University of Sheffield Author-Person=pbr160)

  • Karl Taylor

    ()

    (Department of Economics, The University of Sheffield Author-Person=pta44)

This paper uses data from the British National Child Development Study to investigate the relationship between social interaction and participation in the stock market through holding stocks and/or shares at the individual level. In accordance with the existing literature, the results reveal that a positive relationship exists between social interaction and stock market participation, when both are measured concurrently. Furthermore, this relationship prevails across a range of measures of social interaction and social capital. In addition, we make a potentially important contribution to the existing literature by exploiting the panel nature of the data in order to explore the robustness of the cross-sectional findings. We find that the positive relationship between stock market participation and social interaction prevails within a fixed effects logit framework, which controls for time invariant unobserved effects.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2010_008.html
File Function: First version, 2010
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2010008.

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Length: 28 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
Handle: RePEc:shf:wpaper:2010008
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  1. Guiso, Luigi & Jappelli, Tullio, 2005. "Awareness and stock market participation," CFS Working Paper Series 2005/29, Center for Financial Studies (CFS).
  2. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 811-846.
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  3. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2010. "Cognitive abilities and portfolio choice," European Economic Review, Elsevier, vol. 54(1), pages 18-38, January.
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  12. Brown, Sarah & Taylor, Karl, 2007. "Religion and education: Evidence from the National Child Development Study," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 439-460, July.
  13. Gary S. Becker, 1991. "A Note on Restaurant Pricing and Other Examples of Social Influences on Price," University of Chicago - George G. Stigler Center for Study of Economy and State 67, Chicago - Center for Study of Economy and State.
  14. Denice DiPasquale & Edward L. Glaeser, 1997. "Incentives and Social Capital: Are Homeowners Better Citizens?," Harvard Institute of Economic Research Working Papers 1815, Harvard - Institute of Economic Research.
  15. Brown, Sarah & Taylor, Karl, 2009. "Social interaction and children's academic test scores: Evidence from the National Child Development Study," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 563-574, August.
  16. Edward L. Glaeser & Bruce I. Sacerdote, 2008. "Education and Religion," Journal of Human Capital, University of Chicago Press, vol. 2(2), pages 188-215.
  17. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
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