Abstract
This study examined the relationship between social networks and one’s tendency to invest in risky assets. We used cross-sectional data from the Survey of Health, Aging and Retirement in Europe (SHARE), including a measure of financial risk preference and detailed information on respondents’ most meaningful social ties. We found that social network is a relevant predictor of the willingness to invest in risky assets. The size of the social network positively correlates with stock ownership, and the components of the network play an important role in investment decisions. Moreover, the propensity to invest in stocks is positively associated with the proportion of the network that is comprised of spouse and friends. However, it is negatively associated with the proportion of the network that is comprised by one’s children.
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