Social interaction in the family: Evidence from investors’ security holdings

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Title: Social interaction in the family: Evidence from investors’ security holdings
Author: Knüpfer, Samuli ; Rantapuska, Elias ; Sarvimäki, Matti
Organization: Bank of Finland
Series: Bank of Finland Research Discussion Papers
Series number: 25/2017
Year of publication: 2017
Publication date: 1.9.2017
Published in: Published on 1 September 2017 as "Savvy parent, savvy child? Intergenerational correlations in returns to financial wealth". Second version published on 6 June 2019 as "Why does portfolio choice correlate across generations". Third version published on 10 November 2021 as "Social interaction in the family: Evidence from investors’ security holdings".
Pages: 61
Subject (yso): tulonjako; sukupolvet; varallisuus; sijoitukset; kotitaloudet
Keywords: Suomi; tuotot; arvopaperisijoitukset
JEL: G11; D63
Other keywords: social interaction; portfolio choice; wealth inequality; behavioral bias
Abstract: We show investors tend to hold the same securities as their parents. This intergenerational correlation is stronger for mothers and family members who are more likely to communicate with each other. An instrumental variables estimation and a natural experiment suggest the correlation reflects social influence. This influence runs not only from parents to children, but also vice versa. The resulting holdings of identical securities increase intergenerational correlations in portfolio choice, exacerbate wealth inequality, and amplify the consequences of behavioral biases.
Rights: https://helda.helsinki.fi/bof/copyright


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