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Learning to Take Risks? The Effect of Education on Risk-Taking in Financial Markets
Date Issued
2015-04
Date Available
2015-04-21T10:29:13Z
Abstract
We investigate whether acquiring more education when young has long-term effects on risktaking behavior in financial markets and whether the effects spill over to spouses and children. There is substantial evidence that more educated people are more likely to invest in the stock market. However, little is known about whether this is a causal effect of education or whether it arises from the correlation of education with unobserved characteristics. Using exogenous variation in education arising from a Swedish compulsory schooling reform in the 1950s and 1960s, and the wealth holdings of the population of Sweden in 2000, we estimate the effect of education on stock market participation and risky asset holdings. We find that an extra year of education increases stock market participation by about 2% for men but there is no evidence of any positive effect for women. More education also leads men to hold a greater proportion of their financial assets in stocks and other risky financial assets. We find no evidence of spillover effects from male schooling to the financial decisions of spouses or children.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Start Page
1
End Page
44
Series
UCD Centre for Economic Research Working Paper Series
WP2015/09
Copyright (Published Version)
2015 the authors
Classification
G11
D14
I26
I24
D31
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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