Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/129650 
Year of Publication: 
2015
Series/Report no.: 
IFN Working Paper No. 1092
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
We estimate the causal effect of wealth on stock market participation using administrative data on Swedish lottery players. A $150,000 windfall gain increases stock ownership probability among pre-lottery non-participants by 12 percentage points, while pre-lottery stock holders are unaffected. The effect is immediate, seemingly permanent and heterogeneous in intuitive ways. Standard lifecycle models predict wealth effects far too large to match our causal estimates under common calibrations. Additional analyses suggest a limited role for explanations such as procrastination or real-estate investment. Overall, results suggest that "nonstandard" beliefs or preferences contribute to the nonparticipation of households across many demographic groups.
Subjects: 
Stock market participation
Portfolio choice
Household finance
JEL: 
D1
G02
G11
Document Type: 
Working Paper

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