How Do Cognitive and Non-Cognitive Abilities Influence Stock Market Participation?
37 Pages Posted: 1 Feb 2017
Date Written: January 31, 2017
We study how cognitive and non-cognitive abilities influence stock market participation and what distinguishes investors from non-investors. Combining five datasets enables to observe the effect of mental abilities in the finest detail. We find that economic activity and occupation as well as religion and other characteristics influence stock market participation. More intelligent investors have a higher probability to participate in the stock market but the effect is clearly smaller for women than for men. We conclude that stock market investors tend to be more ambitious, prone to risk and also more intelligent, but less restricted in their nature.
Keywords: behavioral finance, stock market participation, education
JEL Classification: G02, G11, I22, J24
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