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Research Institute of Industrial Economics (IFN) Working Paper Series

No 765:
Is Financial Risk-Taking Behavior Genetically Transmitted?

David Cesarini (), Magnus Johannesson (), Paul Lichtenstein, Örjan Sandewall () and Björn Wallace ()

Abstract: In this paper, we use a sample of almost 30,000 Swedish mono- and dizygotic twins to study the heritability of financial risk-taking. Following a major pension reform in the year 2000, virtually all Swedish adults had to simultaneously make a financial decision affecting post-retirement wealth. We take this event as a field experiment to infer risk preferences. We use standard techniques from behavior genetics to partition variation in risk-taking into environmental and genetic components. Our findings suggest that genetic variation is an important source of individual heterogeneity in financial risk-taking.

Keywords: Genetics; Risk-Taking; Portfolio Investment; Twins; (follow links to similar papers)

JEL-Codes: D01; G11; (follow links to similar papers)

40 pages, September 23, 2008

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