The Effect of Stock Ownership on Individual Spending, Investments, and Loyalty
69 Pages Posted: 26 Feb 2021 Last revised: 2 Nov 2023
There are 2 versions of this paper
The Effect of Stock Ownership on Individual Spending, Investments, and Loyalty
The Effect of Stock Ownership on Individual Spending and Loyalty
Date Written: October 26, 2023
Abstract
In this paper, we analyze how one of the most fundamental behavioral biases in investing—people’s preference for buying specific stocks rather than holding the market portfolio—affects their life-cycle consumption, savings, and stock-market participation. We first show that when investors receive stocks from specific companies, they increase their spending in those companies’ stores. While specific stock ownership increases total spending in the short run, individuals’ overall stock market investments increase in the long run. For identification, we use the staggered allocation of brokerage accounts to individuals over time as well as quasi-randomly distributed stock grants.
Keywords: stock ownership, individual spending, loyalty, fin-tech
JEL Classification: G5, D90, G41, D14
Suggested Citation: Suggested Citation