IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/386.html
   My bibliography  Save this paper

The diversity of household assets holdings in the United States in 2007 and 2009: Measurement and determinants

Author

Listed:
  • Sierminska, Eva M.
  • Silber, Jacques

Abstract

We apply diversity indices, such as the Gini-Simpson index and entropy related indices, to the study of the distribution of individual asset holdings in the United States in 2007 and 2009. We examine the impact of the 2008 recession on asset diversity and the way individual socio-economic characteristics as well as important life events affect this measure. The focus of our analysis is on financial assets. We use a unique panel data set that provides us with comprehensive household level data for 2007 and 2009 in the United States-- the Survey of Consumer Finances. We find that asset diversity increases between 2007 and 2009. In addition, it increases with age, education and income and it is lower at the bottom of the wealth distribution. Life changing situations such as getting divorced or losing one’s job have a statistically significant negative effect on a change in diversity, while getting married or having deteriorating health have a positive effect. Active money management also affects asset diversity positively.

Suggested Citation

  • Sierminska, Eva M. & Silber, Jacques, 2019. "The diversity of household assets holdings in the United States in 2007 and 2009: Measurement and determinants," GLO Discussion Paper Series 386, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:386
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/202039/1/GLO-DP-0386.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Barasinska, Nataliya & Schäfer, Dorothea & Stephan, Andreas, 2012. "Individual Risk Attitudes and the Composition of Financial Portfolios: Evidence from German Household Portfolios," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 1-14.
    2. Briggs, Joseph & Cesarini, David & Lindqvist, Erik & Östling, Robert, 2021. "Windfall gains and stock market participation," Journal of Financial Economics, Elsevier, vol. 139(1), pages 57-83.
    3. Cardak, Buly A. & Wilkins, Roger, 2009. "The determinants of household risky asset holdings: Australian evidence on background risk and other factors," Journal of Banking & Finance, Elsevier, vol. 33(5), pages 850-860, May.
    4. Victor DeMiguel & Lorenzo Garlappi & Raman Uppal, 2009. "Optimal Versus Naive Diversification: How Inefficient is the 1-N Portfolio Strategy?," Review of Financial Studies, Society for Financial Studies, vol. 22(5), pages 1915-1953, May.
    5. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
    6. Cristian Badarinza & John Y. Campbell & Tarun Ramadorai, 2016. "International Comparative Household Finance," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 111-144, October.
    7. Merlin M. Hackbart & Donald A. Anderson, 1975. "On Measuring Economic Diversification," Land Economics, University of Wisconsin Press, vol. 51(4), pages 374-378.
    8. Berry, Charles H, 1971. "Corporate Growth and Diversification," Journal of Law and Economics, University of Chicago Press, vol. 14(2), pages 371-384, October.
    9. Richard H. Thaler & Shlomo Benartzi, 2001. "Naive Diversification Strategies in Defined Contribution Saving Plans," American Economic Review, American Economic Association, vol. 91(1), pages 79-98, March.
    10. Utton, M A, 1977. "Large Firm Diversification in British Manufacturing Industry," Economic Journal, Royal Economic Society, vol. 87(345), pages 96-113, March.
    11. Arthur Kennickell & Annamaria Lusardi, 2004. "Disentangling the Importance of the Precautionary Saving Mode," NBER Working Papers 10888, National Bureau of Economic Research, Inc.
    12. Claire Célérier & Boris Vallée, 2017. "Catering to Investors Through Security Design: Headline Rate and Complexity," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1469-1508.
    13. Charles R. Hulten & Marshall B. Reinsdorf, 2015. "Measuring Wealth and Financial Intermediation and Their Links to the Real Economy," NBER Books, National Bureau of Economic Research, Inc, number hult10-1, January-J.
    14. Gorecki, Paul K, 1974. "The Measurement of Enterprise Diversification," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 399-401, August.
    15. Leslie Hannah & J. A. Kay, 1977. "The Measurement of Concentration," Palgrave Macmillan Books, in: Concentration in Modern Industry, chapter 4, pages 41-63, Palgrave Macmillan.
    16. Hilary Hoynes & Douglas L. Miller & Jessamyn Schaller, 2012. "Who Suffers during Recessions?," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 27-48, Summer.
    17. Jesse Bricker & Brian Bucks & Arthur Kennickell & Traci Mach & Kevin Moore, 2014. "Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009," NBER Chapters, in: Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, pages 323-348, National Bureau of Economic Research, Inc.
    18. Leslie Hannah & J. A. Kay, 1977. "Concentration in Modern Industry," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02773-6, November.
    19. Barry Bosworth, 2012. "Economic Consequences of the Great Recession: Evidence from the Panel Study of Income Dynamics," Working Papers, Center for Retirement Research at Boston College wp2012-4, Center for Retirement Research, revised Feb 2012.
    20. Gideon Rosenbluth, 1955. "Measures of Concentration," NBER Chapters, in: Business Concentration and Price Policy, pages 57-99, National Bureau of Economic Research, Inc.
    21. Andrew C. Worthington, 2009. "Household Asset Portfolio Diversification: Evidence from the Household, Income and Labour Dynamics in Australia (HILDA) Survey," Discussion Papers in Finance finance:200908, Griffith University, Department of Accounting, Finance and Economics.
    22. George J. Stigler, Chairman, Universities-National Bureau Committee for Economic Research, 1955. "Business Concentration and Price Policy," NBER Books, National Bureau of Economic Research, Inc, number univ55-1, January-J.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dorothea Schäfer & Michael Stöckel & Henriette Weser, 2020. "Crisis Impact on the Diversity of Financial Portfolios: Evidence from European Citizens," Discussion Papers of DIW Berlin 1899, DIW Berlin, German Institute for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    2. Ivan Brezina & Juraj Pekár, 2013. "Analýza citlivosti hodnot Herfidalovho-Hirschmanovho indexu slovenského bankového sektora [Sensitivity Analysis of Herfindahl-Hirschman Index on the Slovak Banking Sector]," Politická ekonomie, Prague University of Economics and Business, vol. 2013(6), pages 735-751.
    3. Lu, Xiaomeng & Guo, Jiaojiao & Gan, Li, 2020. "International comparison of household asset allocation: Micro-evidence from cross-country comparisons," Emerging Markets Review, Elsevier, vol. 43(C).
    4. Nicole Palan, 2010. "Measurement of Specialization – The Choice of Indices," FIW Working Paper series 062, FIW.
    5. Stamatios Tsigos & Kevin Daly, 2016. "“Fair go” for all? Wealth and Risk Aversion of Australian Households," Australian Economic Papers, Wiley Blackwell, vol. 55(3), pages 274-300, September.
    6. Oehler, Andreas & Wanger, Hans Philipp, 2020. "Household portfolio optimization with XTFs? An empirical study using the SHS-base," Research in International Business and Finance, Elsevier, vol. 51(C).
    7. Zuzana Brokesova & Andrej Cupak & Gueorgui Kolev, 2017. "Financial literacy and voluntary savings for retirement in Slovakia," Working and Discussion Papers WP 10/2017, Research Department, National Bank of Slovakia.
    8. I. Brezina & J. Pekár & Z. Čičková & M. Reiff, 2016. "Herfindahl–Hirschman index level of concentration values modification and analysis of their change," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(1), pages 49-72, March.
    9. Sofia Vale & Francisco Camões, 2017. "Housing valuation, wealth perception, and households’ portfolio composition," EcoMod2017 10565, EcoMod.
    10. Christian Ehm & Christine Laudenbach & Martin Weber, 2018. "Focusing on volatility information instead of portfolio weights as an aid to investor decisions," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 457-480, June.
    11. Patrick Krieger & Carsten Lausberg & Kristin Wellner, 2018. "Einblicke in die Gründe für nicht-normalverteilte Immobilienrenditen: eine explorative Untersuchung deutscher Wohnimmobilienportfolios [Insights into the reasons for non-normal real estate returns:," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 4(1), pages 49-79, November.
    12. Ikerne Valle & Kepa Astorkiza & Ignacio Díaz-Emparanza, 2017. "Measuring species concentration, diversification and dependency in a macro-fishery," Empirical Economics, Springer, vol. 52(4), pages 1689-1713, June.
    13. Benny Geys & Bruno Heyndels, 2006. "Disentangling The Effects Of Political Fragmentation On Voter Turnout: The Flemish Municipal Elections," Economics and Politics, Wiley Blackwell, vol. 18(3), pages 367-387, November.
    14. Abraham Nunes & Thomas Trappenberg & Martin Alda, 2020. "Measuring heterogeneity in normative models as the effective number of deviation patterns," PLOS ONE, Public Library of Science, vol. 15(11), pages 1-16, November.
    15. Yinan Yang & Qian Wang, 2018. "Insurance Inclusion, Time Preference And Stock Investment Of The Chinese Households," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 63(01), pages 27-44, March.
    16. Boudt, Kris & Raza, Muhammad Wajid & Wauters, Marjan, 2019. "Evaluating the Shariah-compliance of equity portfolios: The weighting method matters," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 406-417.
    17. Edward Nissan & George Carter, 2011. "The Largest Trans-nationals of Developing Economies," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(1), pages 71-83, March.
    18. Rui Pedro Brito & Hélder Sebastião & Pedro Godinho, 2016. "Efficient skewness/semivariance portfolios," Journal of Asset Management, Palgrave Macmillan, vol. 17(5), pages 331-346, September.
    19. Oscar Bajo & Rafael Salas, 2002. "Inequality foundations of concentration measures: An application to the Hannah-Kay indices," Spanish Economic Review, Springer;Spanish Economic Association, vol. 4(4), pages 311-316.
    20. Dorian Owen, 2014. "Measurement of competitive balance and uncertainty of outcome," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 3, pages 41-59, Edward Elgar Publishing.

    More about this item

    Keywords

    diversity; financial assets; Great Recession; United States; wealth;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:glodps:386. 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: . General contact details of provider: https://edirc.repec.org/data/glabode.html .

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/glabode.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.