Peer Effects, Personal Characteristics and Asset Allocation

40 Pages Posted: 13 Jun 2014 Last revised: 21 Jul 2015

Annie Zhang

The University of Auckland

Ben Jacobsen

Tilburg University - TIAS School for Business and Society; Massey University

Ben R. Marshall

Massey University - School of Economics and Finance

Date Written: July 21, 2015

Abstract

We study the relative importance of social factors (including household, workplace, and neighbourhood peer effects) and personal characteristics (including age, gender, tax rates, and funds under management) for asset allocation decisions. The most important factors (in order) are household peer effects, personal characteristics and workplace peer effects. Neighborhood peer effects and financial advice play a less important role. We are able to instrument for both household and workplace peer effects and find a causal relation. All external effects combined explain twice the variation of personal characteristics alone in asset allocation choices.

Keywords: Asset allocation, behavioral finance, financial advice, household finance, individual investors, mutual funds, personal characteristics, peer effects, social

JEL Classification: G02, G11, D12, D14

Suggested Citation

Zhang, Annie and Jacobsen, Ben and Marshall, Ben R., Peer Effects, Personal Characteristics and Asset Allocation (July 21, 2015). Available at SSRN: https://ssrn.com/abstract=2448535 or http://dx.doi.org/10.2139/ssrn.2448535

Annie Zhang (Contact Author)

The University of Auckland ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand
+64 9 373 7599 (Phone)

Ben Jacobsen

Tilburg University - TIAS School for Business and Society ( email )

Warandelaan 2
TIAS Building
Tilburg, Noord Brabant 5037 AB
Netherlands

Massey University ( email )

Auckland
New Zealand

Ben R. Marshall

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North, 30974
New Zealand
64 6 350 5799 (Phone)
64 6 350 5651 (Fax)

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