Health Effects on the Households’ Stockholding Decisions

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: This study investigates the relationship between health and households’ decisions whether to participate in the stock market or not. We construct a set of health variables and out of these, we choose the most important health factors, such as self-assessed health, mobility limitations and mental health. To test empirically the hypothesis that healthier households are more likely to participate in the stock market than unhealthy ones, we adopt a probit model in which we control for the influences of wealth, age, gender, marital status, education as well as country effects. Obtained results are consistent with the theory of background risk and show that worsening of self-assessed health and an increase in the number of mobility limitations indeed lower the likelihood of households’ stockholding. The estimated marginal effects of these factors provide us with an understanding of the magnitudes of these influences. In our work, we do not find any evidence that mental health affects the households’ stockholding decisions.

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