Marriage and other risky assets: A portfolio approach

Abstract

JEL classification: G11 E21 J12 J21 Keywords:Household portfolios Risky investments Marriage Divorce Labor force participation a b s t r a c tWe study the joint impact of gender and marital status on financial investments by testing the hypothesis that marriage represents -in a portfolio framework -a sort of safe asset and that this attribute may change over time. We show that married individuals have a higher propensity to invest in risky assets than single ones, that this marital status gap is stronger for women and that, for women only, it evolves and declines at the end of the sample period. Next we explore a number of possible explanations of the observed gender differences by controlling for background factors that capture the evolution of family and society. We find that both the higher female marital status gap and its time variability vanish for those women who are employed. Our empirical investigation is based on a dataset drawn from the

Is it Money or Brains? The Determinants of Intra-Family Decision Power

“…The prevailing conclusion from these studies is that women reveal a higher degree of risk aversion, so that households where decisions are made by women tend to select less risky investments. For Italian SHIW data, these results are confirmed by Guiso and Jappelli (2002) and Bertocchi, Brunetti and Torricelli (2011).…”

“…Heaton (2002) and Teachman (2002) find that couples are more likely to divorce when they do not share the same education background, particularly when it is the wife who is more educated, and that this effect is stable, or even increasing, over time. Within an empirical investigation of households' investment decisions, Bertocchi, Brunetti and Torricelli (2011) employ dummy variables capturing the fact that the wife is more educated, older, or earning more as proxies for marital instability.…”

“…While these dichotomous measures are of course coarser than the ones used so far, they are often employed in the literature (by Elder and Rudolf, 2003, for a similar dependent variable reflecting within-couple decision power, and for instance by Lundberg, Startz and Stillman, 2003, Lundberg and Ward-Batts, 2000, Thomas, 1994, Heaton, 2002, Teachman, 2002, and Bertocchi, Brunetti and Torricelli, 2011, for a variety of alternative ones).…”

Determinants of Risk-Suitable Investment Portfolios: Evidence from A Sample of Italian Householders

“…Clearly, differences of gender are not indicative by themselves of the propensity to invest in risky assets, but rather related to different underlying risk propensity or economic condition that determines the ownership decision. Bertocchi et al (2011) find that the general tendency to the emancipation of all women in the last decades causes a continuing increase in female labour participation, as well as an increase in women's economic stability and ability to make financial decision; this may result in a convergence of women to the same risk behaviour than men, thus justifying the statistical irrelevance of the gender coefficient. This interpretation seems to be further confirmed by our results, where "background variables" such as employment status (UNEMPLOYED), house ownership (HOUSE) and general economic conditions (GEN_COND) play a decisive role in the decision to hold risky assets and may possibly capture the gender effect more directly.…”

“…Bertocchi et al, 2011, Lupon andSmith, 2003), civil status (MAR) is found to have an influence: married individuals are more incline to invest in risky assets than singles. As suggested by Bertocchi et al (2011), the difference between married and single individuals can indeed be attributed to the idea of marriage as a source of financial security, hence, to the value of marriage as a sort of "safe asset" when making financial risk-holding decisions. In line with the findings of Grable and Joo (1999) and Hanna et al (1998), gender differences (GEN) do not affect the probability of investing in risky assets, contrary to the common belief that females are more risk averse than males (see, among others: Eckel and Grossman, 2008;Fellner and Maciejovsky, 2007;Hartog et al, 2002 andPowell andAnsic, 1997).…”