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
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: Suggested Citation