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Business Education and Portfolio Returns

Author

Listed:
  • Altmejd, Adam

    (Stockholm University)

  • Jansson, Thomas

    (Sveriges Riksbank)

  • Karabulut, Yigitcan

    (Frankfurt School of Finance and Management)

Abstract

Using university admission cutoffs that generate exogenous variation in college-major choices, we provide causal evidence that enrollment in a business or economics program leads individuals to invest significantly more in the stock market, earn higher portfolio returns, and ultimately accumulate higher levels of wealth later in life. Underlying these effects, beyond differences in risk-taking, innate ability, labor market outcomes, or scale effects, is the enhanced ability of business educated individuals to acquire and process economic information and make informed investment decisions. Early investments in financial literacy thus play an important role in generating higher returns that significantly alter individuals' life-cycle wealth profiles.

Suggested Citation

  • Altmejd, Adam & Jansson, Thomas & Karabulut, Yigitcan, 2024. "Business Education and Portfolio Returns," IZA Discussion Papers 16976, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16976
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    References listed on IDEAS

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    More about this item

    Keywords

    portfolio choice; financial literacy; portfolio returns; household wealth; returns to education; distribution of wealth;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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