Molecular Genetics, Risk Aversion, Return Perceptions, and Stock Market Participation

59 Pages Posted: 6 Dec 2018

See all articles by Richard W. Sias

Richard W. Sias

University of Arizona - Department of Finance

Laura T. Starks

University of Texas at Austin - Department of Finance

Harry J. Turtle

Colorado State University, Fort Collins - Department of Finance & Real Estate

Date Written: November 18, 2018

Abstract

Molecular genetic endowments related to cognition, personality, health, and body shape, established at least half a century prior, predict an individual’s risk aversion, beliefs regarding the distribution of expected equity returns, and equity market participation. We estimate that approximately half of the relation between equity market participation and risk aversion, or beliefs regarding the distribution of expected equity returns, arises from the portion of risk aversion, or beliefs, associated with these genetic endowments. Molecular genetic endowments are also strongly associated with many of the variables (e.g., trust, sociability, wealth) shown to explain heterogeneity in equity market participation.

Suggested Citation

Sias, Richard W. and Starks, Laura T. and Turtle, Harry J., Molecular Genetics, Risk Aversion, Return Perceptions, and Stock Market Participation (November 18, 2018). Available at SSRN: https://ssrn.com/abstract=3292249 or http://dx.doi.org/10.2139/ssrn.3292249

Richard W. Sias (Contact Author)

University of Arizona - Department of Finance ( email )

McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

Laura T. Starks

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States
512-471-5899 (Phone)
512-471-5073 (Fax)

Harry J. Turtle

Colorado State University, Fort Collins - Department of Finance & Real Estate ( email )

Fort Collins, CO 80523
United States

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