Portfolio Choice and Mental Health
Review of Finance, Vol. 17, No. 3, 2013
44 Pages Posted: 16 Nov 2009 Last revised: 11 Sep 2014
Date Written: February 1, 2012
Close to 30 percent of the U.S. population experiences at least one mental or substance abuse disorder each year. Given the prevalence of mental health issues, this paper analyzes the role of mental health and cognitive functioning in household portfolio choice decisions. Generally, we find that households affected by mental health issues decrease investments in risky instruments. Various mental health issues can reduce the probability of holding risky assets by up to 19 percent. Moreover, single women diagnosed with psychological disorders increase investments in safe assets. We also find that cognitive functioning issues are associated with an increase in financial assets devoted to retirement accounts.
Keywords: Portfolio choice, mental health, household decisions
JEL Classification: G11, I10
Suggested Citation: Suggested Citation