How Extended Family Mental Health Issues Influence Household Portfolio Allocations

64 Pages Posted: 1 Nov 2018 Last revised: 30 Apr 2021

See all articles by Jermaine Toney

Jermaine Toney

Cornell University; Rutgers University

Vicki L. Bogan

Cornell University

Date Written: March 1, 2019

Abstract

Growing research links household financial decisions to physical and mental health status within the nuclear family. However, the focus on the nuclear family could underestimate the health-wealth effect. Research also 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 household portfolio allocations and the mental health of siblings. We hypothesize that mental health issues (psychological distress) outside of the nuclear family unit are a unique contributor to household portfolio allocation decisions. We use panel data and find that having at least one sibling with psychological distress decreases probability of risky asset ownership (stocks, mutual funds), decreases risky assets as a share of financial assets, and decreases total amount of risky asset holding. These results have important implications for understanding the connection between health, portfolio allocation, and wealth building.

Keywords: household finance, portfolio allocation, mental health

JEL Classification: G11, I14

Suggested Citation

Toney, Jermaine and Toney, Jermaine and Bogan, Vicki L., How Extended Family Mental Health Issues Influence Household Portfolio Allocations (March 1, 2019). 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

Rutgers University ( email )

33 Livingston Avenue
New Brunswick, NJ 08901-1982

Vicki L. Bogan (Contact Author)

Cornell University ( email )

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
101
Abstract Views
976
rank
375,036
PlumX Metrics