Why do so Few Hold Stocks?

Haliassos, Michael; Bertaut, Carol C.

doi:10.2307/2235407

Cited by 839 publications

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“…Basic numeracy also plays a role, but mostly for those with high education (defined as having more than a high school degree); this is true even after accounting for education and total net worth. These findings may help explain the "puzzle" of why so few households hold stocks (Haliassos and Bertaut 1995). Moreover, they may shed light on another puzzling finding in household surveys such as the Survey of Consumer Finances.…”

Section: Table 6 Herementioning

confidence: 74%

“…As far as risk diversification is concerned, Hispanics and Blacks both display difficulty answering this question: only one-third (37 percent) of the Blacks responded correctly, and over 40 percent did not know the answer to this question. This may shed further light on why so many Blacks do not hold stocks (Haliassos and Bertaut 1995). Concerning risk diversification, women are less likely to respond correctly to the question compared to men, and are more likely to not know the answer rather than answering incorrectly.…”

Section: Who Is Financially Literate?mentioning

confidence: 93%

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Financial Literacy and Planning: Implications for Retirement Wellbeing

2011

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Relatively little is known about why people fail to plan for retirement and whether planning and information costs might affect retirement saving patterns. This paper reports on a purpose-built survey module on planning and financial literacy for the Health and Retirement Study which measures how people make financial plans, collect the information needed to make these plans, and implement the plans. We show that financial illiteracy is widespread among older Americans, particularly women, minorities, and the least educated. We also find that the financially savvy are more likely to plan and to succeed in their planning, and they rely on formal methods such as retirement calculators, retirement seminars, and financial experts, instead of family/relatives or co-workers. These results have implications for targeted financial education efforts.

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Section: Table 6 Herementioning

confidence: 74%

Section: Who Is Financially Literate?mentioning

confidence: 93%

Financial Literacy and Planning: Implications for Retirement Wellbeing

2011

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“…Proposition 10 If condition (29) holds, the optimal share of wealth invested in the risky asset is an increasing function of α, β, Φ 0 , and y and a decreasing function of p and δ, i.e. :…”

Section: Resultsmentioning

confidence: 99%

“…However, recent empirical studies show that household portfolios exhibit too much heterogeneity to be consistent with the classical model. In particular, many individuals do not invest in stocks, a feature that has come to be known as the stockholding puzzle (Haliassos and Bertaut, 1995).…”

Section: Introductionmentioning

confidence: 99%

Investment in financial literacy, social security, and portfolio choice

Jappelli¹,

Padula²

2014

Journal of Pension Economics and Finance

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We present an intertemporal portfolio choice model where individuals invest in financial literacy, save, allocate their wealth between a safe and a risky asset, and receive a pension when they retire. Financial literacy affects the excess return from and cost of stock-market participation. Investors simultaneously choose how much to save, their portfolio allocation, and the optimal investment in financial literacy. The model implies that one should observe a positive correlation between stock-market participation (and risky asset share, conditional on participation) and financial literacy, and a negative correlation between the generosity of the social security system and financial literacy. The model also implies that financial literacy accumulated early in life is positively correlated with the individual's wealth and portfolio allocations in later life. Using microeconomic cross-country data, we find support for these predictions.

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“…In other words, narrow framing inhibits one from taking advantage of diversi…cation opportunities, which by de…nition require joint evaluation of risky prospects. As shown by , narrow framing is a critical ingredient for the behavioral approach to the equity premium puzzle; and Barberis, Huang and Thaler (2006) show that narrow framing can help explain one important puzzle in …nance -the fact that contrary to the standard portfolio model a substantial fraction of individuals do not invest in stocks ( (Mankiw and Zeldes, 1991;Haliassos and Bertaut, 1995).…”

Section: Introductionmentioning

confidence: 99%

A Test of Narrow Framing and its Origin

Guiso

2015

Ital Econ J

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I provide a test of narrow framing to explain why individuals turn down small positive expected value lotteries. Participants in a large survey have been asked whether they would accept a small lottery of winning 180 euros with probability of 1/2 or losing 100 euros with the same probability. To half of the sample, randomly selected, the lottery question was asked at the beginning of the interview; the other half made the decision immediately after they were asked to think about and report their subjective probability distribution of future earnings. Consistent with narrow framing, I …nd that individuals that were induced to bring their earnings risk to mind before facing the decision are signi…cantly less likely to turn it down. Furthemore, only those who actually say they are uncertain about their incomes are less likely to reject the lottery. I show that attitudes towards regret and reliance on intuition rather than reasoning are likely to drive the tendency to frame choices narrowly.JEL Classi…cation: D1, D8

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Why do so Few Hold Stocks?

Cited by 839 publications

References 0 publications

Financial Literacy and Planning: Implications for Retirement Wellbeing

Financial Literacy and Planning: Implications for Retirement Wellbeing

Investment in financial literacy, social security, and portfolio choice

A Test of Narrow Framing and its Origin

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