Early health, risk aversion and stock market participation

• Published in: Journal of Behavioral and Experimental Finance
• Main Authors: Böckerman, P. (Petri), Conlin, A. (Andrew), Svento, R. (Rauli)
• Format: Article in Journal/Newspaper
• Language: English
• Published: Elsevier 2021
• Subjects: Birth weight; Health status; Risk aversion; Stock market participation; Northern Finland
• Online Access: http://urn.fi/urn:nbn:fi-fe2022020113899

Abstract To examine the relationship between early health status and financial decisions in adulthood, we link information on birth weight in 1966 from the Northern Finland Birth Cohort to data from the Finnish Central Securities Depository over the period of 1995–2010. We find that persons predisposed to poor health status in early childhood (indicated by low birth weight) avoid participating in the stock market in adulthood, with a 10% increase in birth weight associated with a 1.9% increase in probability of participation. The link between birth weight and stock market participation is partially channeled by poor early health status being associated with higher risk aversion. Early health status is not significantly related to risk taking in terms of the stock portfolio’s composition.