Research Indicates Genetic Component to Investor Behavior

By on September 21, 2009

Stephan Siegel, University of Washington – Michael G. Foster School of Business; Amir Barnea and Henrik Cronqvist, Claremont McKenna College – Robert Day School of Economics and Finance, have published a research paper examining the influence of genetics and family environment on investor behavior.

Their findings show that 45 percent of the variation in stock market participation, asset allocation, and portfolio risk choices are explained by a genetic component. The family environment is found to have an effect on young individuals’ portfolios, but in contrast to the genetic effect, it disappears with age as an individual acquires experiences.

Interestingly, twins who were reared apart still have similar portfolios.

Source:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1467088
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