Assessing the relationship between health and household portfolio allocation

Abstract

This paper surveys the literature on the relationship between health and household portfolio allocation and provides updated empirical analysis based on recent data. Prior research finds robust evidence for cross-sectional correlations between measures of health status and portfolio decisions, but establishing the causal pathways and underlying mechanisms has proven more difficult and complex. Analysis from the most recently available 2016 and 2018 waves of the Health and Retirement Study yields results that are consistent with existing literature. Households with worse self-reported health have a lower probability of holding various types of financial assets and invest a higher share of their portfolios in safe assets, relative to other asset categories.However, there is only weak evidence that new health shocks to a household change portfolio holdings. The paper concludes with a discussion of the implications of this research and directions for future work.

Familiarity bias in direct stock investment by individual investors

“…Additionally, demographic factors such as gender (Barber and Odean, 2001), race/ethnicity, and education, as well as the use of financial professions for investment advice (Lei, 2019;Shin et al, 2020) have shown a consistent impact on stock investment. Other personal characteristics, such as risk tolerance, expected health status (Keller and Siegrist, 2006;Wu, 2021;Yogo, 2016), expected investment horizon (e.g. Blanchett et al, 2018;Choi and Robertson, 2020), and personal expectation about the economy (Angelini and Cavapozzi, 2017;Grevenbrock, 2020;Zhong and Xiao, 1995) are also essential contributors in investors' Familiarity bias in direct stock investment portfolio choices.…”

Protección financiera en salud ante enfermedades crónicas. Una perspectiva desde las finanzas familiares

“…Desde una perspectiva de la teoría de portafolio moderna, que supone a los inversores como adversos al riesgo y por lo tanto buscan un equilibrio entre los rendimientos promedios más altos y su riesgo asociado (Markowitz, 1952). La salud es una fuente de incertidumbre y riesgo, cambios en esta pueden tener grandes impactos en el bienestar económico (Wu, 2021). Un deterioro en la salud puede afectar la asignación optima de los recursos del hogar a través de varias formas: disminución en la ingreso y riqueza asociados a una reducción en la oferta laboral y en la productividad, incremento en el gasto de servicios médicos para el diagnóstico y tratamiento de la enfermedad, así como modificar las preferencias de riesgo y crear estrategias de inversión más seguras (Decker y Schmitz, 2016; Gertler y Gruber, 2002; Wu, 2021).…”