Working Paper No. 765

Is Financial Risk-taking Behavior Genetically Transmitted?

Published: September 23, 2008Pages: 40Keywords: Genetics; Risk-Taking; Portfolio Investment; TwinsJEL-codes: D01; G11

Is Financial Risk-taking Behavior Genetically Transmitted? David Cesarini, Magnus Johannesson, Paul Lichtenstein, Örjan Sandewall and Björn Wallace


In this paper, we use a sample of almost 30,000 Swedish mono- and dizygotic twins to study the heritability of financial risk-taking. Following a major pension reform in the year 2000, virtually all Swedish adults had to simultaneously make a finnancial decision a¤ecting post-retirement wealth. We take this event as a field experiment to infer risk preferences. We use standard techniques from behavior genetics to partition variation in risk-taking into environmental and genetic components. Our findings suggest that genetic variation is an important source of individual heterogeneity in financial risk-taking.

 

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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