Social Interaction in the Family: Evidence from Investors’ Security Holdings

61 Pages Posted: 13 Jun 2019 Last revised: 18 Nov 2021

See all articles by Samuli Knüpfer

Samuli Knüpfer

Aalto University School of Business; BI Norwegian Business School; Research Institute of Industrial Economics (IFN)

Elias Henrikki Rantapuska

Aalto University

Matti Sarvimäki

Aalto University - Department of Economics; Government of the Republic of Finland - VATT Institute for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2017

Abstract

We show investors tend to hold the same securities as their parents. This intergenerational correlation is stronger for mothers and family members who are more likely to communicate with each other. An instrumental variables estimation and a natural experiment suggest the correlation reflects social influence. This influence runs not only from parents to children, but also vice versa. The resulting holdings of identical securities increase intergenerational correlations in portfolio choice, exacerbate wealth inequality, and amplify the consequences of behavioral biases.

Keywords: social interaction, portfolio choice, wealth inequality, behavioral bias

JEL Classification: G11, D63

Suggested Citation

Knüpfer, Samuli and Rantapuska, Elias Henrikki and Sarvimäki, Matti, Social Interaction in the Family: Evidence from Investors’ Security Holdings (September 1, 2017). Bank of Finland Research Discussion Paper No. 25/2017, Available at SSRN: https://ssrn.com/abstract=3031165

Samuli Knüpfer (Contact Author)

Aalto University School of Business

P.O. Box 21210
AALTO, 00076
Finland

HOME PAGE: http://www.samuliknupfer.com

BI Norwegian Business School ( email )

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Research Institute of Industrial Economics (IFN)

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Elias Henrikki Rantapuska

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

Matti Sarvimäki

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

HOME PAGE: http://www.aalto-econ.fi/sarvimaki

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

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P.O Box 1279
Helsinki, FIN-00531
Finland

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