Your Stocks in Your Genes
One of the many problems that have perplexed economists, along with why more people aren't like them and why no one listens to them any more, is why more people don’t participate in the stock market when it's regularly feted as being the safest place to put your money, long-term: the so-called equity premium model (for more of which see Mental Accounting: Not All Money Is Equal). Of course this isn’t necessarily true, as it’s been shown that it's another myth of the market, but given the amount of money spent on promoting the idea of stocks as bound to outperform, it’s as good as, and you might expect people to invest accordingly.
One line of thought suggests that the participation puzzle of why more people don't invest in stocks may be explained by genetic differences in brain function. As usual, IQ is a suspect, but the evidence suggests most investors are as dumb as everyone else, especially IQ researchers, and we should look instead at an old friend: emotions. It may be that some of us are just born investors.
One of the many problems that have perplexed economists, along with why more people aren't like them and why no one listens to them any more, is why more people don’t participate in the stock market when it's regularly feted as being the safest place to put your money, long-term: the so-called equity premium model (for more of which see Mental Accounting: Not All Money Is Equal). Of course this isn’t necessarily true, as it’s been shown that it's another myth of the market, but given the amount of money spent on promoting the idea of stocks as bound to outperform, it’s as good as, and you might expect people to invest accordingly.
One line of thought suggests that the participation puzzle of why more people don't invest in stocks may be explained by genetic differences in brain function. As usual, IQ is a suspect, but the evidence suggests most investors are as dumb as everyone else, especially IQ researchers, and we should look instead at an old friend: emotions. It may be that some of us are just born investors.
