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Household Portfolios and Risk Bearing over Age and Time

  • Alessandro Bucciol

    ()

    (Department of Economics (University of Verona))

  • Raffaele Miniaci

    ()

    (University of Brescia)

We exploit the US Survey of Consumer Finances from 1998 to 2007 to study households’ portfolio risk bearing. We compare four alternative measures of risk, two based on a financial portfolio and two based on a broader portfolio also including – as illiquid assets – human capital, real estate, business wealth and related debt. The measures provide a different ranking of household risk bearing, but they consistently show that risk bearing fell after 2001, and it positively correlates with wealth, income and financial sophistication. Furthermore, the risk-age profile is sensitive to the definition of portfolio, although it looks flat for many years.

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Paper provided by University of Verona, Department of Economics in its series Working Papers with number 15/2011.

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Length: 40
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:ver:wpaper:15/2011
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  1. Robert E. Lipsey & Helen Stone Tice, 1989. "The Measurement of Saving, Investment, and Wealth," NBER Books, National Bureau of Economic Research, Inc, number lips89-1.
  2. Bilias, Yannis & Georgarakos, Dimitris & Haliassos, Michalis, 2009. "Portfolio Inertia and Stock Market Fluctuations," CEPR Discussion Papers 7239, C.E.P.R. Discussion Papers.
  3. James Banks & Richard Blundell & Zoe Oldfield & James P. Smith, 2010. "Housing Mobility and Downsizing at Older Ages in Britain and the United States," Working Papers 787, RAND Corporation Publications Department.
  4. Jessica A. Wachter & Motohiro Yogo, 2010. "Why Do Household Portfolio Shares Rise in Wealth?," Review of Financial Studies, Society for Financial Studies, vol. 23(11), pages 3929-3965, November.
  5. McInish, Thomas H., 1982. "Individual investors and risk-taking," Journal of Economic Psychology, Elsevier, vol. 2(2), pages 125-136, June.
  6. Loriana Pelizzon & Guglielmo Weber, 2006. "Are Household Portfolios Efficient? An Analysis Conditional on Housing," Working Papers 2006_55, Department of Economics, University of Venice "Ca' Foscari".
  7. Sule Alan, 2005. "Entry Costs and Stock Market Participation Over the Life Cycle," Working Papers 2005_1, York University, Department of Economics.
  8. Alessandro Bucciol & Raffaele Miniaci, 2011. "Household Portfolios and Implicit Risk Preference," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1235-1250, November.
  9. Campbell, John & Calvert, Lauren E. & Sodini, Paolo, 2009. "Fight or Flight? Portfolio Rebalancing by Individual Investors," Scholarly Articles 2617031, Harvard University Department of Economics.
  10. James M. Poterba & Andrew A. Samwick, 1997. "Household Portfolio Allocation Over the Life Cycle," NBER Working Papers 6185, National Bureau of Economic Research, Inc.
  11. Nancy Ammon Jianakoplos & Alexandra Bernasek, 2006. "Financial Risk Taking by Age and Birth Cohort," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 981–1001, April.
  12. Markus K. Brunnermeier & Stefan Nagel, 2006. "Do Wealth Fluctuations Generate Time-varying Risk Aversion? Micro-Evidence on Individuals' Asset Allocation," NBER Working Papers 12809, National Bureau of Economic Research, Inc.
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