Decomposition Analyses of Racial/Ethnic Differences in High Return Investment Ownership after the Great Recession

20 Pages Posted: 6 Apr 2015 Last revised: 29 Jun 2015

See all articles by Su Shin

Su Shin

Ohio State University - Human Sciences Department

Sherman D. Hanna

Ohio State University (OSU)

Date Written: April 4, 2015

Abstract

We investigated racial/ethnic differences in high return investment ownership using the 2010 Survey of Consumer Finances (SCF). Logistic regression analysis shows that even after controlling for income, risk tolerance, education, and other factors, Black and Hispanic households are less likely to hold high return investments than White households, but Asian/Other households are not different from White households. Based on results from decomposition methods, if the households with Black and with Hispanic respondents have the same characteristics and risk tolerance as White households, the racial/ethnic gap in high return investment ownership would be narrowed, but still exists. The Fairlie decomposition method might be more reasonable to use for decomposition analyses than the Blinder-Oaxaca method.

Keywords: Decomposition analysis, investment choices, portfolio allocation, racial/ethnic differences, Survey of Consumer Finances

JEL Classification: D14, D92, J15

Suggested Citation

Shin, Su and Hanna, Sherman D., Decomposition Analyses of Racial/Ethnic Differences in High Return Investment Ownership after the Great Recession (April 4, 2015). Journal of Financial Counseling and Planning, Vol. 26, No. 1, 2015, 43-62.. Available at SSRN: https://ssrn.com/abstract=2589979

Su Shin (Contact Author)

Ohio State University - Human Sciences Department ( email )

United States

Sherman D. Hanna

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

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