The stock market is rigged? Conspiracy beliefs and distrust predict lower stock market participation

Abstract

Conspiracy beliefs have negative effects on decision making in several life areas including health, ethical, political and environmental domains. But their influence on financial decisions is not known. The current study examines the mediational role of social trust in the relationship between non-financial conspiracy beliefs and stock market participation. First, exploratory findings provide preliminary cross-country evidence that conspiracy beliefs are associated with lower stock market participation.Next, three studies from close to 53,000 United States respondents show that conspiracy beliefs predict 8%-20% decrease in the odds of investing in stocks even after adjusting for several determinants of stock ownership including income, life satisfaction, cognitive ability and economic attitudes. Mediation analyses shows that conspiracy beliefs predict lower social trust, which in turn predicts lower stock ownership.Overall, the findings imply that endorsing misleading non-financial beliefs about the causes of socio-cultural events may potential impede financial decision making.

Loose and Tight: Creative Formation but Rigid Use of Nominal Compounds in Conspiracist Texts

“…We interpret this pattern as an effect of reduced vocabulary in conspiracist writers. As shown in other studies, conspiracy believers score lower than non‐believers in measures of verbal intelligence (Fiagbenu, 2022) and generally have lower education (van Prooijen, 2017). Low education and limited verbal intelligence could blur semantic boundaries and decrease lexicon specificity, causing compounds to be used out of context, spanning different topics.…”

Loose and tight: Creative formation but rigid use of nominal compounds in conspiracist texts

“…We interpret this pattern as an effect of reduced vocabulary in conspiracist writers. As shown in other studies, conspiracy believers score lower than non-believers in measures of verbal intelligence (Fiagbenu, 2022) and generally have lower education (van Prooijen, 2017). Low education and limited verbal intelligence could blur semantic boundaries and decrease lexicon specificity, causing compounds to be used out of context, spanning different topics.…”

Editorial—The truth is out there: The psychology of conspiracy theories and how to counter them

“…The authors conclude that their studies provided evidence for the notion that, rather than being a response to a specific situation, conspiracy theories might fuel distrust as a situation‐invariant disposition. Building on the role of trust, Fiagbenu (2022) conducted three studies with over 50,000 respondents and demonstrates that belief in conspiracy theories about the stock market consistently predicted between an 8% and 20% reduction in the odds of personally owning stocks, and that this effect is (partially) mediated by lower social trust—an important variable in economic decision‐making. Fiagbenu (2022) presents some of the first evidence that belief in conspiracy theories (e.g., that the stock market is rigged) can be consequential for financial decision‐making.…”

“…Building on the role of trust, Fiagbenu (2022) conducted three studies with over 50,000 respondents and demonstrates that belief in conspiracy theories about the stock market consistently predicted between an 8% and 20% reduction in the odds of personally owning stocks, and that this effect is (partially) mediated by lower social trust-an important variable in economic decision-making. Fiagbenu (2022) presents some of the first evidence that belief in conspiracy theories (e.g., that the stock market is rigged) can be consequential for financial decision-making. Two studies in this special issue aimed to shed further light on the debate between the role of cognitive sophistication versus motivated cognition as competing theoretical accounts of why people believe in conspiracy theories.…”