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Saturday, May 19 • 8:00am - 9:30am
E1a-Financial Decision Power and Household Wealth: The Role of Personality and Cognitive Ability

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Yilan Xu, Rui Yao - This paper studies how financial decision power is allocated within a household and how it is related to wealth accumulation. Evidence from the Health and Retirement Study (HRS) shows that both the absolute and the relative values of husband’s and wife’s personality and cognitive ability predict financial decision power allocation. In light of the comparative advantage theory, this finding implies that whoever has suitable characteristics for financial decision-making that facilitates wealth accumulation should assume the responsibility. Indeed, the couple’s personality and cognitive ability predict household wealth based on financial decision power role and gender. Inefficient financial decision-making power allocation is associated with lower wealth, especially financial wealth, indicating the importance of choosing a person with suitable endowments for financial wealth management.

Presenters
YX

Yilan Xu

Assistant Professor, University of Illinois


Saturday May 19, 2018 8:00am - 9:30am
Beach

Attendees (1)