We present evidence that non-cognitive skills such as individual investors’ personality traits significantly impact their portfolio choices. Based on large-scale survey data from the 2006-2012 waves of the US Health and Retirement Study (HRS) we show that portfolio decisions are influenced by a variety of traits and facets traditionally investigated in the field of personality psychology. Two personality traits that taken together depict a self-centered personality profile appear to have the most significant impact on financial risk taking: lower Agreeableness and higher Cynical Hostility predict higher willingness to take risks. A number of robustness checks corroborate our results. We also show that the effects of Agreeableness seem to pass through the preferences – rather than the beliefs – channel. Our findings shed new light on the non-cognitive side of individuals’ risk taking and have implications for our understanding of the sources of heterogeneity in financial decisions.

Does Investors' Personality Influence their Portfolios?

BUCCIOL, Alessandro;ZARRI, Luca
2015-01-01

Abstract

We present evidence that non-cognitive skills such as individual investors’ personality traits significantly impact their portfolio choices. Based on large-scale survey data from the 2006-2012 waves of the US Health and Retirement Study (HRS) we show that portfolio decisions are influenced by a variety of traits and facets traditionally investigated in the field of personality psychology. Two personality traits that taken together depict a self-centered personality profile appear to have the most significant impact on financial risk taking: lower Agreeableness and higher Cynical Hostility predict higher willingness to take risks. A number of robustness checks corroborate our results. We also show that the effects of Agreeableness seem to pass through the preferences – rather than the beliefs – channel. Our findings shed new light on the non-cognitive side of individuals’ risk taking and have implications for our understanding of the sources of heterogeneity in financial decisions.
Portfolio Choice; Personality Traits; Risk Taking; Behavioral Finance
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11562/883785
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