Household Portfolio Choice, Reference Dependence, and the Marriage Market

52 Pages Posted: 5 Feb 2017

See all articles by Wenchao Li

Wenchao Li

National University of Singapore (NUS)

Changcheng Song

Singapore Management University

Shu Xu

Southwestern University of Finance and Economics (SWUFE)

Junjian Yi

University of Chicago

Abstract

This paper bridges the financial market and the marriage market using a reference-dependent mechanism. Male-biased sex ratios induce families with sons to hold more risky assets, since competitive marital payment in a tight market raises the reference level of marriage expenditure for such families. Using the 2013 China Household Finance Survey data, we find that a 0.1 increase in the sex ratio raises the probability of participating in the stock market by 25.7 percent, or the stock share of liquid wealth by 42.7 percent for families with a son; there appears no effect for families with a daughter.

Keywords: household portfolio choice, reference dependence, prospect theory, sex-ratio imbalance, difference-in-differences estimate

JEL Classification: D03, G02, G11

Suggested Citation

Li, Wenchao and Song, Changcheng and Xu, Shu and Yi, Junjian, Household Portfolio Choice, Reference Dependence, and the Marriage Market. IZA Discussion Paper No. 10528, Available at SSRN: https://ssrn.com/abstract=2911466

Wenchao Li (Contact Author)

National University of Singapore (NUS)

Changcheng Song

Singapore Management University ( email )

50 Stamford Road
Singapore
Singapore
+6568289610 (Phone)

Shu Xu

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Junjian Yi

University of Chicago ( email )

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