Genetic variation in financial decision-making

David Cesarini; Magnus Johannesson; Paul Lichtenstein; ÖRjan Sandewall; Bj ÖRn Wallace

doi:10.1111/j.1540-6261.2010.01592.x

Genetic variation in financial decision-making

David Cesarini, Magnus Johannesson, Paul Lichtenstein, ÖRjan Sandewall, Bj ÖRn Wallace

Research output: Contribution to journal › Article › peer-review

Abstract

Individuals differ in how they construct their investment portfolios, yet empirical models of portfolio risk typically account only for a small portion of the cross-sectional variance. This paper asks whether genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to form a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and find that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also find that these results extend to several other aspects of financial decision-making.

Original language	English (US)
Pages (from-to)	1725-1754
Number of pages	30
Journal	Journal of Finance
Volume	65
Issue number	5
DOIs	https://doi.org/10.1111/j.1540-6261.2010.01592.x
State	Published - Oct 2010

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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10.1111/j.1540-6261.2010.01592.x

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Genetic variation in financial decision-making

Abstract

ASJC Scopus subject areas

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