Genetic Variation in Financial Decision‐Making
Authors:
- David CesariniDCDavid Cesarini
- Magnus JohannessonMJMagnus Johannesson
- Paul LichtensteinPLPaul Lichtenstein
- Örjan SandewallÖSÖrjan Sandewall
- Björn WallaceBWBjörn Wallace
- 21 September 2010
- journal article
- Published by Wiley in The Journal of Finance
- Vol. 65 (5) , 1725-1754
Abstract
Individuals differ in how they construct their investment portfolios, yet empirical models of portfolio risk typically account only for a small portion of the cross‐sectional variance. This paper asks whether genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to form a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and find that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also find that these results extend to several other aspects of financial decision‐making.Keywords
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