Do More Economists Hold Stocks?

A unique data set enables us to test the hypothesis that more economists than otherwise identical investors hold stocks due to informational advantages. We confirm that economists have a significantly higher probability of participating in the stock market than investors with any other education, even when controlling for several background characteristics. We make use of a large register-based panel data set containing detailed information on the educational attainments and various financial and socioeconomic variables. We model the stock market participation decision by the probit model. The results are shown to be highly robust to various assumptions, including unobserved individual heterogeneityInvestor education; Portfolio choice; Stock market participation

Are Economists More Likely to Hold Stocks?

A large register-based panel data set containing detailed information on educational attainments as well as financial and socioeconomic variables for individual investors enables us to test the hypothesis that due to informational advantages economists are more likely to hold stocks than otherwise identical investors. Firstly, we consider the change in stockholdings associated with (i) completing an economics education and (ii) an economist moving into the household. Secondly, we model the stock market participation decision by a probit model with unobserved individual heterogeneity. This model allows us to control for both observable and unobservable investor characteristics. Thirdly, instrumental variables estimation allows us to identify the causal effect of an economics education on stock market participation for individuals who are induced to acquire an economics education due to a university opening. Throughout, we focus explicitly on the effect of a change in educational status on the likelihood of holding stocks. Our overall result is that economists have a significantly higher probability of participating in the stock market than investors with any other education. This result is shown to be highly robust. Finally, we find that economists hold more stocks value-wise than similar investors with other educational backgrounds.Investor Education, Portfolio Choice, Stock Market Participation

The Effects of Marriage and Divorce on Financial Investments: Learning to Love or Hate Risk?

We investigate how changes in marital status affect the decision to take on financial risks. As an alternative to the traditional approach of comparing different groups of investors (men and women) at each point in time, we use a difference-in-differences estimation strategy to compare how the same individual invests at different points in time (before and after marriage or divorce) compared to a benchmark investor, thereby controlling for unobserved systematic differences as well as various background characteristics. We investigate both the propensity to participate in the stock market and the propensity to invest in more risky portfolios. We find that marriage acts as a financial risk-reducer for men and as a financial risk-increaser for women, in the sense that women increase the fraction of wealth invested in stocks after marriage and decrease it after divorce, whereas men show the opposite investment behavior.Gender, Marriage, Divorce, Difference-in-differences, Stock market participation, Portfolio choice.