Down or Out: Assessing the Welfare Costs of Household Investment Mistakes.

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Down or Out: Assessing the Welfare Costs of Household Investment Mistakes.

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dc.contributor.author Sodini, Paolo
dc.contributor.author Campbell, John
dc.contributor.author Calvet, Laurent E.
dc.date.accessioned 2009-06-26T13:19:06Z
dc.date.issued 2007
dc.identifier.citation Calvet, Laurent E., John Y. Campbell, and Paolo Sodini. 2007. Down or out: assessing the welfare costs of household investment mistakes. Journal of Political Economy 115(5): 707-747. en
dc.identifier.issn 0022-3808 en
dc.identifier.uri http://nrs.harvard.edu/urn-3:HUL.InstRepos:3122488
dc.description.abstract This paper investigates the efficiency of household investment decisions using comprehensive disaggregated Swedish data. We consider two main sources of inefficiency: underdiversification (“down”) and nonparticipation in risky asset markets (“out”). While a few households are very poorly diversified, most Swedish households outperform the Sharpe ratio of their domestic stock index through international diversification. Financially sophisticated households invest more efficiently but also more aggressively, and overall they incur higher return losses from underdiversification. The return cost of nonparticipation is smaller by almost one‐half when we take account of the fact that nonparticipants would likely be inefficient investors. en
dc.description.sponsorship Economics en
dc.language.iso en_US en
dc.publisher University of Chicago Press en
dc.relation.isversionof http://dx.doi.org/10.1086/524204 en
dash.license LAA
dc.title Down or Out: Assessing the Welfare Costs of Household Investment Mistakes. en
dc.relation.journal Journal of Political Economy en
dash.depositing.author Campbell, John

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