Identity Concerns

Question 1

What is the goal of exploring identity in regards to stock market

Answer 1

Answer the question of non-participation, also among wealthy individuals

Question 2

Core Idea:

Answer 2

People care about upholding a positive sense of self and receive disutility when associating with people that they view negatively, based on perceived characteristics and traits.
Due to identity conflict

Question 3

Survey, negative views about stock holders
(participation?)

Answer 3

Does negative view about stockholders lead to non-participation?
- Select identity relevant characteristics
- Measure peoples views about stockholders and non stockholders for these characteristics

Question 4

Three Steps of Exploring negative views and stock market participation

Answer 4

1.) Show relevance of identity concerns for investment behavior
-> Experiment varying associations of decisions (identical investments)

2.) Establish a mechanism
-> Experiment induce changes in perception

3.) Show field data
-> Link survey to administrative data

Question 5

Framework explanation

Answer 5

Agents maximize utility. Actions (investing) provide classic outcome based utility. This action associates the individual with a group with function g(a) mapping actions int groups. If the evaluation of a groups set of identity traits is negative (qbar < 0), then the individual receives disutility from their beliefs over the expected associated group characteristics.

Question 6

Characteristics q

Answer 6

Identity relevant characteristics
Views are only relevant if stockholders and non-stockholders are viewed differently

Question 7

Setup, eliciting stock holder traits

Answer 7

Participants are given descriptions of character traits, gambler, greed, selfish, etc. and then separately rate stockholders and non-stockholders for these traits on a scale from 1-10
to get avg. neg. view of stockholders

Question 8

Eliciting stock holder character traits, empirics

Answer 8

Perception of Stockholders are more negative than non-stockholders in the Netherlands and across countries. Robust to changes in outcomes, measurement and framing
People have different perceptions based on investment types

Question 9

Step 1: Identity concerns and investment decisions, Design

Answer 9

Participants can choose between two Situations with two investment options with identical payoff structure and risk.

Sit.1: Investment associated with stockholders vs. Safe asset

Framing approach:
Same intuition, but participants are randomly assigned to receive stock framing of a lottery or a draw framing of a lottery.

Question 10

Step 1: Identity concerns and investment decisions, Results

Answer 10

People who received draw framing treatment are more likely to choose the risky option. Similar to Situation two in the investment choice. Contrary to outcome based theories, which would predict no differences in these different narratives.

Question 11

Step 2: Establishing Mechanism, Design

Answer 11

Need to identify:
i) shift in subjects perception
-> Participants receive randomized information of donation behavior from a pool of stock and non stockholders
ii) shift has to be exogenous
-> randomly draw 10 stockholders and 10 non stockholders from the pool with random variation in donation behavior
iii) outcome to measure stock aversion behavior
-> Subjects make stock investment decision as before

Question 12

Step 2: Establishing Mechanism, Result

Answer 12

Changes perceptions about greediness and selfishness but not gambler type, successful manipulation
If participants receive info that stockholders donate significantly more than non stockholders they are more likely to choose the investment associated with stockholders more frequently, conditional on receiving stock framing description

Effects are:
- Persistent
- Relevant
As measured in an obfuscated follow up survey for a robustness check to exclude demand effects

Question 13

Step 3: Field data

Answer 13

• Liss Panel in Netherlands
• self reported stock ownership cross country

Participation and avg negative perception are negatively correlated.

Question 14

Implications: Market response

Answer 14

Targeted ads to change vie of stockholders

Design products that obfuscate involvement with stock market

Question 15

Implications: Government policy

Answer 15

Instead of improving financial literacy it might be more effective to change perceptions about stockholders

Question 16

Implication: Misreporting in Surveys

Answer 16

There are severe differences in reported and actual stock holdings in self reported stock ownership surveys.
This might be due to associated identity conflict which individuals want to obfuscate