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Limited Stock Market Participation Among Renters and Home Owners

60 Pages Posted: 22 Mar 2010 Last revised: 26 Jan 2017

Roine Vestman

Stockholm University - Department of Economics; Swedish House of Finance

Date Written: January 25, 2017


The stock market participation rate among homeowners is twice as high as among renters. This paper builds a life-cycle portfolio choice model with endogenous housing tenure choice. A stylized form of preference heterogeneity generates a substantial difference in participation rates. A majority of households has a large savings motive and choose to be homeowners and participate. A minority of households has a small savings motive, choose to be renters and find it less worthwhile to participate. Difference-in-difference regressions do not attribute the difference to transitions from renting to owning or vice versa, supporting the message that time-invariant characteristics matter.

Keywords: Limited Participation, Home Ownership, Household Finance

JEL Classification: G11, E44, D91, E21

Suggested Citation

Vestman, Roine, Limited Stock Market Participation Among Renters and Home Owners (January 25, 2017). Available at SSRN: or

Roine Vestman (Contact Author)

Stockholm University - Department of Economics ( email )

Universitetsvägen 10 A
House A, floor 4 and 7
Frescati, Stockholm


Swedish House of Finance ( email )

Drottninggatan 98
111 60 Stockholm

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