Patriotism in Your Portfolio

52 Pages Posted: 20 May 2004

See all articles by Adair Morse

Adair Morse

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Sophie Shive

University of Notre Dame - Department of Finance

Date Written: May 17, 2006

Abstract

More patriotic countries have greater equity home bias. In a panel of World Values Surveys covering 53 countries, measures of patriotism are positively related to home bias measures after controlling for transaction barriers, diversification benefits, information and familiarity. Changes in patriotism vary with changes in the home bias. The results are robust to using ISSP measures of patriotism covering 24 countries and within-U.S. data from the Survey of Consumer Finances. Instrumenting patriotism with social variables uncorrelated with economic and political factors confirms that patriotism affects investment. The average country invests $18 to $30 billion more abroad with a one standard deviation drop in patriotism.

Keywords: Home Bias, Patriotism, Behavioral Finance, International, Investment

JEL Classification: G11, G15, F21

Suggested Citation

Morse, Adair and Shive, Sophie, Patriotism in Your Portfolio (May 17, 2006). Available at SSRN: https://ssrn.com/abstract=406200 or http://dx.doi.org/10.2139/ssrn.406200

Adair Morse (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sophie Shive

University of Notre Dame - Department of Finance ( email )

P.O. Box 399
Notre Dame, IN 46556-0399
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
1,225
rank
8,537
Abstract Views
8,318
PlumX Metrics