Pensions and Risk Aversion: The Influence of Race, Ethnicity, and Class on Investor Behavior

28 Pages Posted: 11 Jan 2007  

Dorothy A. Brown

Emory University School of Law

Abstract

Defined Contribution plans have greatly expanded over the last two decades. Defined Contribution plans place the investment risk on employees. Employee investment decision making should be examined to determine whether those decisions are influenced by race, ethnicity and/or class.

Empirical data show that investor behavior is greatly influenced by race, ethnicity and/or class. Blacks and Hispanics are far less likely to invest in the stock market than whites. Low-income whites are far more likely to invest in the stock market than blacks or Hispanics regardless of income. As a result, retirement account balances are the greatest for many white households and the least for black, Hispanic, and certain white households. This article explores those issues and suggests solutions that will allow employees to overcome their built-in biases and make wiser investment choices.

Suggested Citation

Brown, Dorothy A., Pensions and Risk Aversion: The Influence of Race, Ethnicity, and Class on Investor Behavior. Lewis and Clark Law Review, Vol. 11, 2007; Washington & Lee Legal Studies Paper No. 07-04. Available at SSRN: https://ssrn.com/abstract=955856

Dorothy Andrea Brown (Contact Author)

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States
404-712-8218 (Phone)
404-727-6820 (Fax)

HOME PAGE: http://www.law.emory.edu/faculty/faculty-profiles/dorothy-a-brown.html

Paper statistics

Downloads
324
Rank
74,543
Abstract Views
1,853