Do Role Models Affect Risk-Taking Behavior? the Case of Minorities

38 Pages Posted: 14 Jan 2020 Last revised: 2 Mar 2020

See all articles by Yosef Bonaparte

Yosef Bonaparte

University of Colorado at Denver - Department of Finance

Sarah Khalaf

Kuwait University

George M. Korniotis

University of Miami; Miami Business School; University of Miami - Behavioral Decision Making Cluster

Multiple version iconThere are 2 versions of this paper

Date Written: December 2019

Abstract

We show that social changes, like the success of role models, affects household financial decisions. Specifically, minorities underinvest in equity, which contributes to the widening racial wealth gap. But the election of President Obama in 2008, who is a role model from minorities, is a positive social change that should encourage investing. Indeed, post-2008 and compared to White Americans, minorities, trade more often, have a higher propensity to increase risk tolerance as well as allocations to risky assets and savings, and a lower propensity to exit the market. Overall, we show that societal factors affect the racial stock ownership gap.

Keywords: asset allocation, PSID, Savings, SCF, Stock ownership, Trading, wealth gap

JEL Classification: D14, G11, J15, J16

Suggested Citation

Bonaparte, Yosef and Khalaf, Sarah and Korniotis, George M., Do Role Models Affect Risk-Taking Behavior? the Case of Minorities (December 2019). CEPR Discussion Paper No. DP14264. Available at SSRN: https://ssrn.com/abstract=3518604

Yosef Bonaparte (Contact Author)

University of Colorado at Denver - Department of Finance ( email )

United States

Sarah Khalaf

Kuwait University ( email )

Safat, 13060
Kuwait

George M. Korniotis

University of Miami ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-5728 (Phone)

Miami Business School ( email )

University of Miami - Behavioral Decision Making Cluster ( email )

5250 University Drive
Coral Gables, FL 33124
United States

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