Socioeconomic Status and Learning from Financial Information

Camelia Kuhnen and Andrei Mui ()
Additional contact information
Andrei Mui: Babes-Bolyai University, Department of Psychology,

No 2015-018, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: The majority of lower socioeconomic status (SES) households in the U.S. and Europe do not have any stock investments, which is detrimental to wealth accumulation. Here, we examine one explanation for this puzzling fact, namely, that economic adversity may influence how people learn from financial information. Using experimental and survey data from the U.S. and Romania, we find that lower SES individuals form more pessimistic beliefs about the distribution of stock returns and are less likely to invest in stocks. SES shapes people's beliefs about stocks, leading to large differences across households in their propensity to participate in financial markets.

Keywords: socioeconomic status; learning; beliefs; household finance; stock market participation (search for similar items in EconPapers)
JEL-codes: D14 D84 G11 (search for similar items in EconPapers)
Date: 2015-12
Note: IP
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http://humcap.uchicago.edu/RePEc/hka/wpaper/Kuhnen_miu_2015_SES-learning.pdf First version, November, 2015 (application/pdf)

Related works:
Journal Article: Socioeconomic status and learning from financial information (2017)
Working Paper: Socioeconomic Status and Learning from Financial Information (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hka:wpaper:2015-018

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