Genetic Variation in Financial Decision‐Making

David Cesarini; Magnus Johannesson; Paul Lichtenstein; ÖRJAN SANDEWALL; Björn Wallace

doi:10.1111/j.1540-6261.2010.01592.x

Journal of Finance Vol. 65 No. 5 2010

Genetic Variation in Financial Decision‐Making

David Cesarini¹; Magnus Johannesson²; Paul Lichtenstein³; ÖRJAN SANDEWALL⁴; Björn Wallace^2,5

¹ New York University · ² Stockholm School of Economics · ³ Karolinska Institutet · ⁴ Research Institute of Industrial Economics · ⁵ University of Cambridge

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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.

DOI: 10.1111/j.1540-6261.2010.01592.x
Volume: 65
Issue: 5
Pages: 1725-1754
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Genetic Variation in Financial Decision‐Making

Abstract

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