Emotional Assets and Investment Behavior

27 Pages Posted: 19 Feb 2009  

Rachel A.J. Pownall

Tilburg University - Department of Finance; Maastricht University - Department of Finance

Kees C. G. Koedijk

Tilburg University - Department of Finance

Frans de Roon

Tilburg University - Department of Finance

Date Written: February 12, 2009

Abstract

This paper empirically models a number of emotional assets in the optimal investment decision. Using the spanning techniques we analyze how these emotional assets add to the risk-return profile of investors. We find highly significant results for art, wine and books as a significant allocation into the emotional asset sector. Our findings firstly substantiate the current allocation of HNWI in the luxury goods sector, and secondly give rise to substantive evidence for investors choosing to maximize risk and return whilst also being prepared to give up some financial return in some sectors for emotive reasons. This gives insightful evidence that investors tend to integrate both personal and societal values into the portfolio management process and moreover helps us to separate the emotional and investment value when investing into assets in general.

Keywords: Portfolio Management, Asset pricing, Consumption and Investment decisions

JEL Classification: G11, Z11, E21

Suggested Citation

Pownall, Rachel A.J. and Koedijk, Kees C. G. and de Roon, Frans, Emotional Assets and Investment Behavior (February 12, 2009). Available at SSRN: https://ssrn.com/abstract=1341875 or http://dx.doi.org/10.2139/ssrn.1341875

Rachel Ann Jane Pownall (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Maastricht University - Department of Finance ( email )

Maastricht, 6200 MD
Netherlands

Kees G. Koedijk

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 4663048 (Phone)
+31 13 4662052 (Fax)

Frans A. De Roon

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 1 3466 8361/3025 (Phone)
+31 1 3466 2875 (Fax)

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