Household Portfolio Choice, Reference Dependence, and the Marriage Market
52 Pages Posted: 5 Feb 2017
This paper bridges the financial market and the marriage market using a reference-dependent mechanism. Male-biased sex ratios induce families with sons to hold more risky assets, since competitive marital payment in a tight market raises the reference level of marriage expenditure for such families. Using the 2013 China Household Finance Survey data, we find that a 0.1 increase in the sex ratio raises the probability of participating in the stock market by 25.7 percent, or the stock share of liquid wealth by 42.7 percent for families with a son; there appears no effect for families with a daughter.
Keywords: household portfolio choice, reference dependence, prospect theory, sex-ratio imbalance, difference-in-differences estimate
JEL Classification: D03, G02, G11
Suggested Citation: Suggested Citation