How Extended Family Mental Health Issues Influence Household Portfolio Allocations

66 Pages Posted: 1 Nov 2018 Last revised: 7 Mar 2020

See all articles by Jermaine Toney

Jermaine Toney

Rutgers University ; Cornell University

Vicki L. Bogan

Cornell University

Date Written: March 1, 2019


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 of siblings. Mental health conditions affect nearly one fourth (23%) of the adult U.S. population. 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. 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 Bogan, Vicki L., How Extended Family Mental Health Issues Influence Household Portfolio Allocations (March 1, 2019). Available at SSRN: or

Jermaine Toney

Rutgers University ( email )

33 Livingston Avenue
New Brunswick, NJ 08901-1982

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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