A study of working adults found that males are 91% more likely than females to be invested in the stock market. With every year of age, the odds of being invested in the stock market increased by 3%. The paper was published in the Journal of Neuroscience, Psychology, and Economics.
The stock market is a platform where shares of publicly traded companies are bought and sold, allowing investors to own a portion of a company and potentially benefit from its growth and profitability. People invest money in stocks to build wealth over time, as the value of their investments can increase if the companies perform well.
Stocks offer the potential for higher returns compared to traditional savings accounts or bonds, making them an attractive option for long-term investment. Additionally, investing in the stock market provides an opportunity to diversify one’s financial portfolio, spreading risk across different assets.
Studies show that stock market investors tend to have some characteristics that differentiate them from individuals not investing in the stock market. Stock market investors generally tend to be more ambitious, more prone to risk, and more intelligent than individuals not investing in stocks. Additionally, they tend to possess a higher level of education and better quantitative and language skills compared to the general population. Studies also show that individuals with more pronounced neuroticism tend to have negative attitudes towards investment in stocks.
Study author Adrian Furnham and his colleagues wanted to further investigate traits associated with participation in the stock market. They decided to focus on personality, demographic characteristics and wealth. These authors’ expectation was that males, older individuals, graduates, and wealthier individuals are more likely to participate in the stock market. They conducted an online survey.
The survey included 1,509 English-speaking adults, with 56% from the U.K., 18% from North America, 12% from South Africa, and the remainder from various other countries. All participants were employed, working, and considered middle class, with an average age of 46 years. Of these, 845 were females, and most held skilled and professional jobs.
The study authors asked participants whether they invest in the stock market and to rate their personal wealth on a 100-point scale. Additionally, participants completed an assessment of personality traits related to the workplace (the High Potential Trait Indicator).
Results showed that 50% of the participants had investments in the stock market. Those invested in the stock market were more likely to be male, older, and with a graduate degree (vs. those without such a degree). They also tended to be wealthier.
In terms of personality traits, those invested in the stock market exhibited a greater acceptance of risk, a higher willingness to embrace ambiguity, more ambition/competitiveness, increased conscientiousness, and were somewhat better adjusted. Further analysis confirmed that males were 91% more likely than females to invest in stocks, and each additional year of age raised the likelihood of stock market investment by 3%.
“The results of this study confirmed a number of the hypotheses namely that males more than females, older more than younger, graduates more than nongraduates, and people who rated their income higher were significantly more likely to be SMP [stock market participants]. While five of the six personality traits were significantly correlated to SMP, the regression suggested only two were significant, namely Tolerance for Ambiguity and Competitiveness,” the study authors concluded.
The study sheds light on personal specificities of stock market participants. However, the study only looked at stock market participation using a single yes/no question. More detailed examinations of stock market participation might yield more nuanced results. Additionally, there might be differences between occasional investors with low levels of investments in the stock market and individuals with more substantial investments in this type of assets.
The paper, “Correlates of Stock Market Investment,” was authored by Adrian Furnham, Stephen Cuppello, and Mark Fenton-O’Creevy.
