How Extended Family Mental Health Issues Influence Household Portfolio Allocations

52 Pages Posted: 1 Nov 2018 Last revised: 31 Dec 2018

Date Written: October 1, 2018

Abstract

Growing research links household financial decisions and health status within the nuclear family. However, the focus on the nuclear family could underestimate the health-wealth effect. Previous research finds that household wealth can decline when an extended family member experiences a physical health shock. We expand current economic modeling to investigate the connection between portfolio allocations and mental health among siblings. We hypothesize that mental health issues outside of the nuclear family unit are a unique contributor to household portfolio allocation decisions. We use panel data and find significant effects of having at least one sibling with a mental health issue on household financial decisions. The effects include decreased probability of risky asset ownership (stocks, mutual funds), decreased risky assets as a share of financial assets, and decreased total amount of risky asset holdings.

Keywords: household finance, portfolio allocation, mental health

JEL Classification: G11, I14

Suggested Citation

Toney, Jermaine and Bogan, Vicki L., How Extended Family Mental Health Issues Influence Household Portfolio Allocations (October 1, 2018). Available at SSRN: https://ssrn.com/abstract=3252143 or http://dx.doi.org/10.2139/ssrn.3252143

Jermaine Toney

Cornell University

Warren Hall
Ithaca, NY 14853
United States

Vicki L. Bogan (Contact Author)

Cornell University ( email )

Warren Hall
Ithaca, NY 14853
United States
607-254-7219 (Phone)

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