Financial Attention

50 Pages Posted: 31 Jul 2012 Last revised: 22 May 2015

Nachum Sicherman

Columbia University; IZA Institute of Labor Economics

George Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences

Duane J. Seppi

Carnegie Mellon University - David A. Tepper School of Business

Stephen P. Utkus

The Vanguard Group, Inc. - Center for Retirement Research

Date Written: May 19, 2015

Abstract

This paper investigates investor attention using novel panel data on daily online logins for a large sample of retirement accounts. We find support for selective attention to portfolio information. Account logins fall by 9.5% after market declines. Investors also pay less attention when the VIX volatility index is high. The level of attention and the attention/return correlation are strongly related to investor demographics (gender, age) and financial condition (wealth, holdings). Using a new statistical decomposition, we also show how aggregate and individual household trading are related to investor attention.

Keywords: investors attention, ostrich effect, behavioral economics/finance

JEL Classification: D03, G02

Suggested Citation

Sicherman, Nachum and Loewenstein, George and Seppi, Duane J. and Utkus, Stephen P., Financial Attention (May 19, 2015). Available at SSRN: https://ssrn.com/abstract=2120955 or http://dx.doi.org/10.2139/ssrn.2120955

Nachum Sicherman (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States
212-854-4464 (Phone)
212-316-9355 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

George F. Loewenstein

Carnegie Mellon University - Department of Social and Decision Sciences ( email )

Pittsburgh, PA 15213-3890
United States
412-268-8787 (Phone)
412-268-6938 (Fax)

Duane J. Seppi

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2298 (Phone)
412-268-8896 (Fax)

Stephen P. Utkus

The Vanguard Group, Inc. - Center for Retirement Research ( email )

100 Vanguard Boulevard, M38
Malvern, PA 19355
United States
610-669-6308 (Phone)

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