2006–2010

Genetic Variation in Financial Decision-Making

Reprint No. 2010:25

Author(s): David Cesarini, Magnus Johannesson, Paul Lichtenstein, Örjan Sandewall and Björn WallaceYear: 2010 Title: Journal of Finance Volume (No.): 65 (5) Pages: 1725–1754
Online article (restrictions may apply)


Individuals differ in how they construct their investment portfolios, yet empirical models of portfolio risk typically account only for a small portion of the cross-sectional variance. This paper asks whether genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to form a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and find that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also find that these results extend to several other aspects of financial decision-making.


Reference:
Cesarini, David, Magnus Johannesson, Paul Lichtenstein, Örjan Sandewall and Björn Wallace (2010), "Genetic Variation in Financial Decision-Making". Journal of Finance 65(5), 1725–1754.

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

About the book

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