Household Equity Research Articles

Acculturation and Intimate Partner Violence Among Kenyans in the United States

Intimate partner violence (IPV) is abuse by a partner or spouse. This study focused on IPV among Kenyan immigrants to the United States. Several studies reported connections between IPV and cultural tensions experienced during the acculturation process. Scholars disagree whether acculturation buffers against IPV by exposing immigrants to adaptive social norms or heightens risk factors among those facing challenges acclimating to new settings. Whereas this association has been researched among Latinx and Asian communities in the United States, it is understudied among African and especially Kenyan diasporas. This descriptive study explored how acculturation and IPV among U.S. Kenyans were experienced depending on age, gender, and years of acculturation to determine measures for reducing IPV within U.S.-based diasporas. Results indicated that IPV was most prevalent among long-term immigrants. In terms of gender, women endured IPV more frequently than men. Virtually all participants expressed hesitancy to report abuses for fear of partner retribution or legal repercussions. To minimize the prevalence of IPV, several individuals advocated for community organizations that provide education programs and victim assistance. While most participants agreed that such organizations provide helpful resources, they disagreed on whether these groups could eliminate IPV or achieve household equity among spouses.

Meta-analysis of the role of equity dimensions in household solar panel adoption

If some households are less likely to be able to participate in solar panel adoption due to socio-economic or demographic characteristics, then inequity can exist. We use meta-regressions to analyse links between research characteristics and dimensions of equity including gender, economic distributions, renting, education, and ethnicity. We find that studies assessing actual solar panel uptake rather than intentions are less likely to analyse gender influences. Cross-sectional studies are more likely to include analyses of economic distributions and renting impacts but are less likely to assess policy variables. We also investigate links between research characteristics and prior findings. Significant influences of equity on solar panel uptake are 17 percentage points (p.p.) and 10 p.p. less likely to be found with regard to education and ethnicity, respectively, in household-level studies compared to aggregated studies. Our paper encourages more frequent analysis of equity aspects, coverage of a broader range of equity aspects, and analysis that incorporates both equity and policy variables. For research questions on household equity, we suggest using data on actual solar-panel uptake at the household level.

Military experience and household stock market participation: Evidence from China

This paper examines the relationship between military experience and household stock market participation. Using data from the 2010 wave of China Family Panel Studies (CFPS), we find that the military experience promotes the households participating in the stock market. We further investigate how military experience affects a household investment decision. The results show that the level of risk-taking and social trust of military households mainly drives the positive nexus. Moreover, the length of military service rather than the age affects household equity investment decisions. We also find that the positive relationship is more prominent in high-income households, and low-education households.

Analysis on the equity differential on household healthcare financing in developing countries: empirical evidence from Tanzania, East Africa

BackgroundAchieving equity in healthcare services has been a global priority. According to the literature, a slew of initiatives aimed at increasing household equity in healthcare financing have exacerbated the problem, making it hard for most developing countries to understand the real cause of the problem.MethodThe non-experimental research design has been used to explore the Tanzania Panel Survey (NPS) data 2019/2020, to investigate equity differential in household healthcare financing in Tanzania by the use of conventional instrumental variable methods of Two-stage and Three-stage least square methodsResultsDespite the global agenda of universal health coverage, this paper reveals that 86 percent of Tanzania lacks health insurance with a high degree of inequitable distribution of health facilities as 71.54 percent of the population is in rural areas, yet these areas have poor health systems compared to urban ones. These disparities increase pressure on household healthcare financing and widen the inequity and equality gaps simultaneously. Additionally, a household's income, education, health care waivers, out-of-pocket expenditure, and user fees have been found to have a significant impact on household equity in healthcare financing.ConclusionTo reverse the situation and increase equity in household healthcare financing in most developing countries, this paper suggests that an adequate pooling system should be used to allow more people to be covered by medical prepayment programs, and the donor-funded programs in developing countries should focus on health sector infrastructure development and not the capacity building.

Why Was There More Household Stock Market Participation During the COVID-19 Pandemic?

Although the nation was experiencing an economic downturn due to the COVID-19 pandemic outbreak, we nonetheless observed an increase in household equity share value relative to both domestic market capitalization and retail investors’ trading volume. In this paper, we aim to interpret the reasons underlying this seemingly unexpected phenomenon. We investigate portfolio choices with stocks, bonds, and life annuities under an inverse S-shaped probability distortion function. The results indicate that people invest more heavily in risky assets and buy more annuities when reducing their savings in risk-free accounts, which is indeed consistent with the reality.

Wealth heterogeneity, information acquisition and equity home bias: Evidence from U.S. household surveys of consumer finance

• Equity home bias occurs along both extensive and intensive margins. • Wealthy US households are more likely to participate in the foreign stock market. • As investor wealth increases, portfolio share invested in foreign equities decreases. • Overall international diversification is increasing with wealth. • A noisy rational expectations equilibrium model with wealth heterogeneity, entry costs, and information processing can explain both margins. The well-known equity home bias has two components: an extensive and intensive margin. Using data on direct stock holdings of U.S. households, we find that the decision to participate in foreign stock markets depends on investor wealth, with richer investors more likely to participate (the extensive margin). We document a new finding: as investor wealth increases, the portfolio share invested in foreign equities tends to decrease (the intensive margin). A noisy rational expectations equilibrium model with wealth heterogeneity, entry costs, and endogenously chosen information processing capacity can generate the new negative relationship and help understand the U.S. household equity home bias along both margins.

Livelihood benefits and challenges of community reforestation in Timor Leste: implications for smallholder carbon forestry schemes

ABSTRACT This paper describes the emerging livelihood benefits and challenges of community reforestation in Timor-Leste and discusses implications for smallholder carbon forestry schemes. Social research was conducted in an upland area of central Timor Leste with farmers who have been planting trees since 2012 for soil stabilisation, timber, biodiversity enhancement and potential carbon income. A semi-structured survey of 40 tree planting households across six villages was conducted in 2017 to determine the perceived benefits and challenges of reforestation. Additional in-depth, qualitative interviews were conducted in 2018 with 5 village leaders, 8 project farmers and 10 non-project farmers to gain a deeper understanding of some of the issues raised in the survey. Farmers reported that the benefits of tree plantations were income from tree payments from an NGO; investment in children’s education; and improved biodiversity. The challenges to reforestation included livestock damage; lack of water; insects; weeds; and distance to the tree plantations. We conclude that community-based reforestation projects in Timor Leste have the potential to contribute to smallholders’ livelihoods through direct carbon payments and ecosystem services. However, household equity in terms of land ownership, labour, carbon income and social development need to be addressed.

Securities regulation, household equity ownership, and trust in the stock market

Using aggregate data from national accounts, we study whether strengthening and harmonizing securities regulation across the European Union increases household equity ownership. We find a significant increase in the proportion of liquid assets invested in equity, both when a household’s own country adopts the regulation and when other countries adopt the regulation. To directly explore the mechanism through which households’ willingness to directly invest in the equity market increases, we show that the effect of securities regulation is stronger in countries where trust is low and between countries where cultural biases are most pronounced.

Risk sharing, siblings, and household equity investment: evidence from urban China

In a society where financial market and insurance market are under-developed, social networks play an important role in risk sharing. Using data from the 2011 China Household Finance Survey, this paper examines the effect of siblings, which form strong ties in a social network, on household equity investment. We find that having one more sibling increases the probability of participation in stock market by 15–17% points and increases the fraction of total assets in stock investment by 2–3% points. We also find that sisters have a larger effect on equity investment than brothers. With the examination of the effects of siblings on social interaction, risk tolerance, saving, and borrowing behaviors, we argue that the main channel through which siblings affect household investment is risk sharing.

Born to Be Bad

Using a geographic measure of unethical culture developed by Parsons, Sulaeman and Titman (2018) and a novel dataset of financial advisors' childhood residences, we show that advisors who grow up in U.S. counties with less ethical cultures are more likely to commit misconduct as adults. Our identification strategy exploits variation in childhood backgrounds between advisors working together in the same branch office in adulthood, thereby overcoming the reflection problem. Our results are robust to controlling for other factors from the early-life experiences literature such as income, education, ethnicity and religiosity. We find that areas with high concentrations of advisors that hail from less ethical cultures have lower levels of household equity participation. Our findings have important implications for how regional cultural norms regarding misconduct evolve.

How Housing Affects Stock Investment—An SEM Analysis

The extant literature regarding the effects of housing on stock investment shows inconsistent findings, either positive or negative effects have been reported. This paper investigates the mechanisms by which housing affects household stock investment through a structure equation model (SEM). Applying the data from the China Household Finance Survey (CHFS), we confirm and quantify the magnitudes of contemporaneous “wealth effects” and “crowd-out effects” of housing on household equity investment. Overall, the combined effect of housing on stock investment is positive in the context of urban China.

Wealth Heterogeneity, Information Acquisition and Equity Home Bias

The well-known equity home bias has two components: an extensive and intensive margin. Using data on direct stock holdings of U.S. households, we find that the decision to participate in foreign stock markets depends on investor wealth, with richer investors more likely to participate (the extensive margin). We document a new finding: as investor wealth increases, the portfolio share invested in foreign equities tends to decrease (the intensive margin). A noisy rational expectations equilibrium model with wealth heterogeneity, entry costs, and endogenously chosen information processing capacity can generate the new negative relationship and help understand the U.S. household equity home bias along both margins.

Securities Regulation and Household Equity Ownership

Using aggregate data from national accounts, we study whether strengthening and harmonizing securities regulation across the European Union increases household equity ownership. We find a significant increase in the proportion of liquid assets invested in equity, both when a household’s own country adopts the regulation and when other countries adopt the regulation. To directly explore the mechanism through which households’ willingness to directly invest in the equity market increases, we show that the effect of securities regulation is stronger in countries where trust is low and between countries where cultural biases are most pronounced.

Be Fearful When Households are Greedy: The Household Equity Share and Expected Market Returns

We empirically document that the “dumb money” effect exists for the aggregate stock market. We define the “Household Equity Share” (HEShare), the share of household equity and fixed income assets allocated to equities. HEShare negatively forecasts excess returns on the aggregate US stock market, both univariately and after controlling for past changes in equity prices and common market return forecasters. The non-household sector’s equity share does not forecast returns, ruling out economy-wide explanations for HEShare’s return predictability. At times, HEShare predicts negative mean excess returns on the market, suggesting that behavioral factors explain our findings.

The Household Equity Share and Expected Market Returns

The “Household Equity Share” (HEShare), the share of the household sector's equity and credit assets allocated to equities, is a negative predictor of excess returns on the US stock market. When the household sector has a higher equity share, future excess returns to equities are lower on average. This predictability is robust to the definition of the asset classes, first versus second half of sample, and adjusting for finite sample bias. HEShare outperforms many popular forecasters of market returns, including the cyclically adjusted price-earnings ratio, the equity share in new issuances, and the consumption-wealth ratio. Our results suggest that household holdings of financial assets play an important role in setting asset prices and risk premia.

Stock Prices, Regional Housing Prices, and Aggregate Technology Shocks

The correlation between stock and housing prices, which is critical for household asset allocations, varies widely by metropolitan area and country. A general equilibrium model demonstrates that an aggregate positive technology shock increases stock prices and housing demand but can decrease housing prices where land supply is elastic because stable future rents are discounted at higher interest rates. Using panel data of U.S. metropolitan areas and OECD countries, I find that the housing price response to TFP shocks as well as the stock-housing correlation are smaller and even negative where the housing supply is elastic. I also find that household equity investment is positively related to housing supply elasticity.

Strategic Mortgage Default: The Effect of Neighborhood Factors

This article studies strategic default—the willingness of a borrower to walk away from a mortgage when the value of the home falls below the unpaid principal balance despite an ability to pay. This study differs from the literature in two fundamental ways. First, we use unique data assets describing the household's equity position and capacity to carry the debt in addition to credit performance to identify strategic defaulters accurately. Second, we address externalities from local foreclosures and other strategic defaults and find that the incidence of strategic default is sensitive to the presence of other nearby strategic defaulters. These results have significant implications for foreclosure and loss mitigation policies employed by servicers and investors.

The True Impact of Immediate Annuities on Retirement Sustainability: A Total Wealth Perspective

Past research on systematic withdrawals and annuitization tends to find that partial annuitization reduces the probability of financial asset depletion and may even provide an opportunity to build a larger portfolio legacy value for sufficiently long retirement periods. We agree with these findings, but determine that partial annuitization itself is only the reason for these outcomes in a subset of cases. When retiree wealth is investigated from a total balance sheet perspective, by including the present value of remaining single-premium immediate annuity (SPIA) payments as a way to show the implied stock/bond asset allocation glidepath, a significant portion of the benefits provided by a stocks/SPIA strategy can be explained by the implied rising equity glidepath underlying the approach. Accordingly, we examine the relative success of static portfolios, stock/SPIA portfolios, and dynamic stock/bond portfolios that match the glidepath of a stock/SPIA strategy, in order to separate the impact of the glidepath and the impact of mortality credits into their component parts. The conclusion shows that prior studies which indicated a benefit of partially annuitizing a retiree’s portfolio were often actually showing the benefits of a rising equity glidepath using a bucketed liquidation strategy that spends down fixed assets first and allows the household equity allocation to rise. Although this research finds that SPIAs can enhance retirement success, retirees must live well past life expectancy before the unique mortality credit contribution from SPIAs provides material benefits, as the remainder of the SPIA “benefit” can be replicated simply by using bonds and stocks with a rising equity glidepath. In fact, for those who do not live to life expectancy, the impact of SPIAs is positive only because the value of the rising equity glidepath (which can be replicated without the SPIA) outweighs the negative contribution from mortality credits. Because the primary value of SPIAs accrues for those who live beyond life expectancy, the results also show that inflation-adjusted SPIAs are more effective than fixed SPIAs, due to the larger payments in later years. Given this current research, the primary scenarios where SPIAs should be used are specifically those where the intent is to hedge significant longevity risk beyond life expectancy; in the remaining scenarios for most retirees, though, the more effective way to improve retirement outcomes is simply to implement the rising equity glidepath that bucketed SPIA strategies indirectly create.

Household inequality, social welfare, and trade

Working with Sen social welfare functions (meaning explicit separability between mean income and income dispersion), we develop a generalized dual approach to tracking household inequality aspects of social welfare in general equilibrium. We highlight how household equity can be examined analytically alongside production efficiency in duality-based models, using our dual framework to explore potential trade-offs between efficiency and equity effects of trade policy. Our results complement the set of standard inequality results in trade theory focused on functional rather than household inequality. We also find that the relative distributional impact of tariffs on welfare is conditional on the initial level of inequality.

Razionalità limitata, scelte di portafoglio e investimento azionario estero

I provide a plausible explanation of household equity holdings, in a framework where economic agents have behavioral preferences. Basically, we develop our analysis assuming the existence of boundedly rational economic agents. In that sense, I explicitly recall some Keynesian propositions: the analysis of Keynes' work reveals that his approach was quite consistent with and actually anticipated both Simon's conception of bounded rationality and recent work on cognitive psychology. The representative agent derives utility not only from consumption (standard models) but also from risky financial wealth fluctuations. Moreover, the investor frames the stock market risk narrowly and has loss averse preferences. I numerically solve a simple model of international portfolio choice for the foreign equity share, providing a possible explanation for the equity home bias puzzle. Only economic agents able to process correctly information deriving from stock markets exploit the diversification opportunities provided by international financial markets. JEL Codes: G11, G12, G15