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. The link between birth weight and stock market participation is partially explained by the fact that poor early health status leads to risk aversion. Early health status is not significantly related to the portfolio's value-growth tilt.
Highlights
Several studies have investigated the effects of early life conditions on economic outcomes later in life, the well-known ‘‘fetal origins hypothesis’’
We find that birth weight is statistically significantly associated with higher stock market participation (Columns 1–3 of Panel A)
Using a longitudinal research design, we show that poor health status is linked to lower stock market participation later in life
Summary
Several studies have investigated the effects of early life conditions on economic outcomes later in life, the well-known ‘‘fetal origins hypothesis’’ (see, for example, Almond and Currie, 2011). Birth weight is concise and one of the most tracked summary metrics of early health status that has been used in the medical and epidemiological literature (Barker, 1990; Corman et al, 2017). Along with health and health-related outcomes, the literature has related birth weight to key economic outcomes such as educational attainment and earnings in adulthood (Behrman and Rosenzweig, 2004; Black et al, 2007). An obvious but relatively unexplored candidate for explaining financial decisions in adulthood is early health endowment
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