Social Interaction and Stock‐Market Participation
2004/01/13 by Harrison Hong, Jeffrey D. Kubik, Jeremy C. Stein · 1,911 citations
Business, Management and Accounting · Economics, Econometrics and Finance · Psychology · #Business #Demographic economics #Economics #Financial Literacy, Pension, Retirement Analysis #Health and Retirement Study #Housing Market and Economics #Microfinance and Financial Inclusion #Peer effects #Psychology #Social psychology #Social relation #Sociology #Stock (firearms) #Stock market
paper · doi:10.1111/j.1540-6261.2004.00629.x
published in The Journal of Finance 59(1), 137-163 (Wiley)
openalex publication_date 2004/01/13 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/05
Abstract
ABSTRACT We propose that stock‐market participation is influenced by social interaction. In our model, any given “social” investor finds the market more attractive when more of his peers participate. We test this theory using data from the Health and Retirement Study, and find that social households—those who interact with their neighbors, or attend church—are substantially more likely to invest in the market than non‐social households, controlling for wealth, race, education, and risk tolerance. Moreover, consistent with a peer‐effects story, the impact of sociability is stronger in states where stock‐market participation rates are higher.
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