Genetic Variation in Financial Decision‐Making

Cesarini, David; Johannesson, Magnus; Lichtenstein, Paul; Sandewall, Örjan; Wallace, Bj ÖRn

doi:10.1111/j.1540-6261.2010.01592.x

Cited by 269 publications

(140 citation statements)

References 88 publications

(144 reference statements)

Supporting

Mentioning

132

Contrasting

Order By: Relevance

“…Our Portfolio Risk variable is the average risk level of the funds owned by an individual, with the risk of each fund measured as the (annualized) standard deviation of the fund's monthly rate of return over the previous years. 6 Cesarini et al (2010) provide more details.…”

Section: Risky Behaviorsmentioning

confidence: 99%

The psychometric and empirical properties of measures of risk preferences

2017

Self Cite

View full text Add to dashboard Cite

We examine the psychometric and empirical properties of some commonly used survey-based measures of risk preferences in a population-based sample of 11,000 twins. Using a model that provides a general framework for making inferences about the component of measured risk attitudes that is not due to measurement error, we show that measurement-error adjustment leads to substantially larger estimates of the predictive power of risk attitudes, of the size of the gender gap, and of the magnitude of the sibling correlation. Risk attitudes are predictive of investment decisions, entrepreneurship, and drinking and smoking behaviors; are robustly associated with cognitive ability and personality; and our estimates are often larger than those Uncertain (2017) 54:203-237 in the literature. Our results highlight the importance of adjusting for measurement error across a wide range of empirical settings.

show abstract

Section: Risky Behaviorsmentioning

confidence: 99%

The psychometric and empirical properties of measures of risk preferences

2017

Self Cite

View full text Add to dashboard Cite

show abstract

“…Similarly, Dohmen et al (2012) find that attitudes such as risk and trust are transmitted from parents to children. Cesarini et al (2010) explain about 25% of risk taking in financial decision making by genetic variation. Sometimes, parental education is not considered as being directly part of financial socialization, but studies separate the effect of intentional teaching by parents and the general effect that parents' characteristics have on their children (Gudmunson and Danes, 2011).…”

Section: Family Backgroundmentioning

confidence: 99%

Childhood roots of financial literacy

Grohmann

Kouwenberg

Menkhoff

2015

Journal of Economic Psychology

180

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We use the concept of financial socialization and aim to represent three major agents of financial socialization: family, school and work. Thus we compile twelve relevant childhood characteristics in a new survey study and examine their relation to financial literacy, while controlling for established socio-demographic characteristics. We find in a mediation analysis that both family and school positively affect the financial literacy of adults. Moreover, financial literacy and school related variables also have a direct effect on financial behavior. This suggests that family factors and schooling work through complementary channels. Terms of use: Documents in EconStor may Childhood Roots of Financial Literacy 1 IntroductionMany economic decisions require basic knowledge of financial concepts, such as interest rates and inflation. However, many people lack this type of knowledge. The degree of this deficiency has been systematically researched using tests, which collect "financial literacy"scores. There is growing evidence that individuals who possess higher financial literacy have better economic outcomes as it improves financial decision making (e.g., Lusardi and Mitchell, 2014). At the same time, these studies also find that in many countries and many population groups, financial literacy levels are low. In the USA only 30.2% can answer all three of the standard financial literacy questions. This number is not much higher at 44.8% and 53.2% in the Netherlands and Germany respectively (Lusardi and Mitchell, 2014, BucherKoenen and Lusardi, 2011, van Rooij et al., 2011b Several variables have been found to be linked to a person's financial literacy. These factors include socio-demographic variables in the way that better education, higher age or higher incomes are related to higher financial literacy. Many of these factors seem to be at least partially shaped by childhood experiences of today's adults (see Lusardi et al., 2010).Indeed, several studies either look at the impact of some childhood experiences on financial behavior (e.g., Webley and Nyhus, 2013, Bucciol andVeronesi, 2014), or use a specific childhood variable as instrument for financial literacy (Behrman et al., 2010, 2012, van Rooij et al., 2011b. Thus many childhood variables have been considered in relation to financial literacy and financial behavior. What remains less clear is: what are the main channels through which childhood experiences affects financial literacy and financial be...

show abstract

“…4 A similar approach seems fruitful for household finance. In recent studies, Barnea, Cronqvist and Siegel (2009) and Cesarini et al (2009aCesarini et al ( , 2009b compare the choices of identical and fraternal twins and show that risk aversion is in part an inherited trait. Their findings suggest that the results reported in the present paper control, at least partially, for differences in risk aversion.…”

Section: Introductionmentioning

confidence: 99%

Twin Picks: Disentangling the Determinants of Risk-Taking in Household Portfolios

Calvet

Sodini

2011

SSRN Journal

View full text Add to dashboard Cite

This paper investigates the determinants of financial risk-taking in a panel containing the asset holdings of Swedish twins. We measure the impact on risk-taking of a broad set of demographic, financial, and portfolio characteristics, and use yearly twin pair fixed effects to control for genes and shared background. We report a strong positive relation between risky asset market participation and financial wealth. Among participants, the average financial wealth elasticity of the risky share is significantly positive and estimated at 22%, which suggests that the average individual investor has decreasing relative risk aversion. Furthermore, the financial wealth elasticity of the risky share itself is heterogeneous across investors and varies strongly with characteristics. The elasticity decreases with financial wealth and human capital, and increases with habit, real estate wealth and household size. As a consequence, the elasticity of the aggregate demand for risky assets to exogenous wealth shocks is close to, but does not coincide with, the elasticity of a representative investor with constant relative risk aversion. We confirm the robustness of our results by running time-differenced instrumental variable regressions, and by controlling for zygosity, lifestyle, mental and physical health, the intensity of communication between twins, and measures of social interactions.

show abstract

Genetic Variation in Financial Decision‐Making

Cited by 269 publications

References 88 publications

The psychometric and empirical properties of measures of risk preferences

The psychometric and empirical properties of measures of risk preferences

Childhood roots of financial literacy

Twin Picks: Disentangling the Determinants of Risk-Taking in Household Portfolios

Contact Info

Product

Resources

About