Windfall gains and stock market participation

Joseph Briggs, David Cesarini, Erik Lindqvist, Robert Östling

    Research output: Contribution to journalArticlepeer-review


    We exploit the randomized assignment of lottery prizes in a large administrative Swedish data set to estimate the causal effect of wealth on stock market participation. A $150,000 windfall gain increases the stock market participation probability by 12 percentage points among prelottery nonparticipants but has no discernible effect on prelottery stock owners. A structural life cycle model significantly overpredicts entry rates even for very high entry costs (up to $31,000). Additional analyses implicate pessimistic beliefs regarding equity returns as a major source of this overprediction and suggest that both recent and early-life return realizations affect beliefs.

    Original languageEnglish (US)
    Pages (from-to)57-83
    Number of pages27
    JournalJournal of Financial Economics
    Issue number1
    StatePublished - Jan 2021


    • Household saving and personal finance
    • Intertemporal consumer choice
    • Portfolio choice and investment decisions

    ASJC Scopus subject areas

    • Accounting
    • Finance
    • Economics and Econometrics
    • Strategy and Management


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