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Wealth Stratification and Portfolio Choice

Author

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  • Karl David Boulware
  • Kenneth N. Kuttner

Abstract

This paper investigates the past decade's increase in wealth inequality along racial and ethnic lines. Using a new measure of wealth stratification based on data from the Survey of Consumer Finances, we find that stratification increased significantly for blacks from 2007 to 2016; Hispanics exhibited a similar but less pronounced trend. Our regression analysis shows that relative to whites, blacks and Hispanics tend to invest more in houses and less in stocks, controlling for observable demographic factors. Consequently, these groups did not benefit as much as whites from the decade's spectacular increase in stock prices.

Suggested Citation

  • Karl David Boulware & Kenneth N. Kuttner, 2020. "Wealth Stratification and Portfolio Choice," AEA Papers and Proceedings, American Economic Association, vol. 110, pages 411-415, May.
    • Handle: RePEc:aea:apandp:v:110:y:2020:p:411-15
    DOI: 10.1257/pandp.20201111
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    Citations

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    Cited by:

    1. Jermaine Toney, 2022. "Is there wealth stability across generations in the U.S.? Evidence from panel study, 1984–2017," Contemporary Economic Policy, Western Economic Association International, vol. 40(4), pages 551-567, October.
    2. Bucciol, Alessandro & Papadovasilaki, Dimitra, 2023. "Portfolio decisions and perceived racial discrimination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 106(C).

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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