Stock Market Aversion? Political Preferences and Stock Market Participation

40 Pages Posted: 6 Mar 2008 Last revised: 17 Jun 2010

See all articles by Markku Kaustia

Markku Kaustia

Aalto University School of Business

Sami Torstila

Aalto University

Date Written: March 26, 2010

Abstract

We find that left-wing voters and politicians are less likely to invest in stocks, controlling for income, wealth, education, and other relevant factors. This finding from unique data sets in Finland is robust both at the zip code and at the individual level. A moderate left voter is 17-20% less likely to own stocks than a moderate right voter. The results are consistent with the idea that personal values are a factor in important investment decisions, in this case leading to “stock market aversion”. The results are inconsistent with alternative explanations such as wealth effects, risk aversion, reverse causality, return expectations, or social capital.

Keywords: Stock Market Participation, Personal values

JEL Classification: D72, G18, G32, P16

Suggested Citation

Kaustia, Markku and Torstila, Sami, Stock Market Aversion? Political Preferences and Stock Market Participation (March 26, 2010). Available at SSRN: https://ssrn.com/abstract=966254 or http://dx.doi.org/10.2139/ssrn.966254

Markku Kaustia

Aalto University School of Business ( email )

P.O. Box 1210
Helsinki, 00100
Finland
+3589 4313 8475 (Phone)
+3589 4313 8678 (Fax)

Sami Torstila (Contact Author)

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland
+358 40 353 8069 (Phone)

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