Genetic variation in financial decision-making

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

    Research output: Contribution to journalArticle

    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 languageEnglish (US)
    Pages (from-to)1725-1754
    Number of pages30
    JournalJournal of Finance
    Volume65
    Issue number5
    DOIs
    StatePublished - Oct 2010

    ASJC Scopus subject areas

    • Accounting
    • Finance
    • Economics and Econometrics

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  • Cite this

    Cesarini, D., Johannesson, M., Lichtenstein, P., Sandewall, ÖR., & Wallace, B. ÖR. (2010). Genetic variation in financial decision-making. Journal of Finance, 65(5), 1725-1754. https://doi.org/10.1111/j.1540-6261.2010.01592.x