Do Role Models Affect Risk-Taking Behavior?
47 Pages Posted: 5 Aug 2017 Last revised: 15 Nov 2018
Date Written: November 14, 2018
We study if the success of role models affect the portfolio decisions of U.S. households. We exploit the election of President Obama as a pseudo natural experiment to examine the affect of role models on the financial decisions of minorities. His political success is a positive experience for minorities that should spur optimism, mitigate perceived risks, enhance trust in the stock market, and encourage investment in financial assets by minorities. Indeed, post-2008 and compared to white Americans, minorities become more risk tolerant, participate more in the stock market, trade more often, invest more in risky assets, and are more willing to save. Overall, our findings suggest that social factors, like the rise of a role model, are important for portfolio decisions.
Keywords: Asset Allocation, Stock Market Participation, Trading, Role Model, PSID, SCF
JEL Classification: J15, J16, D14, G11
Suggested Citation: Suggested Citation