| 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. |