Template-Type: ReDIF-Paper 1.0
Title: Proud to Not Own Stocks: How Identity Shapes Financial Decisions
Author-Name: Luca Henkel
Author-Email: luca.henkel@uni-bonn.de
Author-Name: Christian Zimpelmann
Author-Email: zimpelmann@iza.org
Classification-JEL: G41, G51,D14, D83
Keywords: Identity, Perceptions, Stock Market Participation, Financial Decision-Making

Abstract: This paper introduces a key factor influencing households’ decision to invest in the stock market: how people view stockholders. Using surveys we conducted with nearly 8,500 individuals
from eleven countries, we document that a large majority of respondents view stockholders negatively – they are perceived as greedy, gambler-like, and selfish individuals. We then provide
experimental evidence that such perceptions of identity-relevant characteristics causally influence decision-making: if people view stockholders more negatively, they are less likely to choose
stock-related investments. Furthermore, by linking survey and administrative data, we show that
negative perceptions strongly predict households’ stock market participation, more so than leading alternative determinants. Our findings provide a novel explanation for the puzzlingly low
stock market participation rates around the world, new perspectives on the malleability of financial decision-making, and evidence for the importance of identity in economic decision-making.

Note: 
Length: 99
Creation-Date: 2023-06
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp380
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2022_380v2