Genetic Variation in Financial Decision‐Making
- Author(s): DAVID CESARINI, MAGNUS JOHANNESSON, PAUL LICHTENSTEIN, ÖRJAN SANDEWALL, BJÖRN WALLACE
- Published: Sep 21, 2010
- Pages: 1725-1754
- DOI: 10.1111/j.1540-6261.2010.01592.x
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.