nep-neu New Economics Papers
on Neuroeconomics
Issue of 2013‒10‒02
one paper chosen by
Daniel Houser
George Mason University

  1. The Influence of Non-Cognitive and Cognitive Ability on Individuals’ Stock Market Participation By Gyllenram, André; Hanes, Niklas; Hellström, Jörgen

  1. By: Gyllenram, André (Department of Economics, Umeå School of Business and Economics); Hanes, Niklas (Department of Economics, Umeå School of Business and Economics); Hellström, Jörgen (Umeå School of Business and Economics)
    Abstract: Stock market participation is found to be positively related to cognitive, as well as non-cognitive ability, controlling for wealth, income, age, and other demographic and socioeconomic factors. Interestingly, the effects are of economic significant magnitudes, e.g. participation is on average 11.49% larger among those with high compared with low cognitive and non-cognitive abilities, and holds also when controlling for individuals risk preferences. The later indicates that cognitive and non-cognitive abilities have a role in affecting financial decisions also through non-preference driven effects. Limitations in non-cognitive ability do further explain non-participation among affluent individuals.
    Keywords: Household finance; Investor behavior; Stock market participation; Psychological traits; Intelligence; Risk preferences
    JEL: D14 G11
    Date: 2013–09–30
    URL: http://d.repec.org/n?u=RePEc:hhs:umnees:0866&r=neu

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