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Cognitive Abilities and Portfolio Choice

  • Dimitris Christelis

    (University of Salerno and CSEF)

  • Tullio Jappelli

    (University of Naples Federico II, CSEF and CEPR**)

  • Mario Padula


    (Department of Economics, University Of Venice Cà Foscari)

We study the relation between cognitive abilities and stockholding using the recent Survey of Health, Ageing and Retirement in Europe (SHARE), which has detailed data on wealth and portfolio composition of individuals aged 50+ in 11 European countries and three indicators of cognitive abilities: mathematical, verbal fluency, and recall skills. We find that the propensity to invest in stocks is strongly associated with cognitive abilities, for both direct stock market participation and indirect participation through mutual funds and retirement accounts. Since the decision to invest in less information-intensive assets (such as bonds) is less strongly related to cognitive abilities, we conclude that the association between cognitive abilities and stockholding is driven by information constraints, rather than by features of preferences or psychological traits.

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Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2008_19.

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Length: 47
Date of creation: 2008
Date of revision:
Handle: RePEc:ven:wpaper:2008_19
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