Dispositional optimism and stock investments

This paper analyzes the relationship between dispositional optimism and stock investments, controlling for cognitive skills and personality traits such as trust, social interactions and risk aversion. We use data from the Survey of Health, Ageing and Retirement in Europe (SHARE) on investors aged 50+ in twelve European countries. Our results show that dispositional optimism and personality matter for financial decisions. Optimism is positively and significantly related to both the ownership of stocks and the share of gross financial wealth invested in these assets and its role is especially relevant for risk tolerant investors and investors with little trust in others.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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