We examine whether the decision to participate in the stock market and other related portfolio decisions are influenced by income hedging motives. Economic theory predicts that the market participation propensity should increase as the correlation between income growth and stock market returns...

Experimental and field data suggest that a social factor, discrimination, affects the risk perceptions and portfolio decisions of U.S. households. Experiments indicate that minorities perceive greater income risk. Minorities with relatively high risk perceptions are 10% less likely to invest....

We show that social changes, like the success of role models, affects household financial decisions. Specifically, minorities underinvest in equity, which contributes to the widening racial wealth gap. But the election of President Obama in 2008, who is a role model from minorities, is a...

This study examines the stock market entry and exit decisions of U.S. households. We find that around 25% of households enter or exit from their non-retirement investment accounts biennially. Cross-sectional and time-series tests indicate that income risk affects equity ownership turnover. A...

We examine the influence of financial literacy and perceptions of financial knowledge on households' financial risk-taking. Greater literacy and self-belief in one's literacy positively relate to equity ownership. However, self-awareness of illiteracy reduces participation by about 5%. We find...

This paper examines whether perceptions of discrimination affect the economic expectations of U.S. households. We focus on two forms of expectations that play a central role in economic and financial decisions: labor income and inflation. Using experimental data, we show that discrimination...

This paper examines whether monetary policy affects the portfolio decisions of U.S. households. Contrary to the conventional wisdom, interest rate increases are related to higher equity ownership and higher wealth allocations to risky assets. Inflation hedging is a likely explanation for these...