Racial/Ethnic Disparities in High Return Investment Ownership: A Heckman Selection Model

7 Pages Posted: 17 Feb 2018

See all articles by Guangyi N. Wang

Guangyi N. Wang

Ohio State University

Sherman D. Hanna

Ohio State University (OSU)

Date Written: February 7, 2018

Abstract

This study investigates racial/ethnic differences in high return investment ownership in the U.S. Households with low levels of financial assets might not be able to meaningfully make investment choices, so a Heckman two-stage selection model was used to separate minimum asset level status from the allocation decision, specifically in whether households owned at least one high return investment. We found households with White respondents were more likely than households with Black and Hispanic respondents to have adequate financial assets for investment. Conditional on having adequate financial assets, and controlling for household characteristics and financial literacy, White households were more likely to own high return investments than Black, Hispanic and Asian/other households. Policies to nudge households to invest some wealth in high return investment assets would benefit minority households.

Keywords: Heckman selection model, investment choices, portfolio allocation, racial/ethnic differences, Survey of Consumer Finances

JEL Classification: D14, D92, J15

Suggested Citation

Wang, Guangyi N. and Hanna, Sherman D., Racial/Ethnic Disparities in High Return Investment Ownership: A Heckman Selection Model (February 7, 2018). Applied Economics Letters, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3120033

Guangyi N. Wang

Ohio State University ( email )

1787 Neil Ave.
Room 231
Columbus, OH Ohio 43210-117
United States
4159877945 (Phone)

HOME PAGE: http://https://www.linkedin.com/in/guangyiwang

Sherman D. Hanna (Contact Author)

Ohio State University (OSU) ( email )

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

Register to save articles to
your library

Register

Paper statistics

Downloads
52
Abstract Views
181
rank
381,435
PlumX Metrics