How Couples Approach Portfolio Allocation

TitleHow Couples Approach Portfolio Allocation
Publication TypeGovernment Report
Year of Publication2017
AuthorsFessenden, H, Lazaryan, N, Neelakantan, U
SectionEconomic Brief
PublisherFederal Reserve Bank of Richmond
KeywordsDecision making, Marriage, Older Adults, Retirement Planning and Satisfaction, Risk Aversion

The classical theory of household portfolio allocation finds that the share of household wealth invested in risky assets is independent of the level of household wealth. However, this prediction is at odds with empirical observations. This Economic Brief presents findings that reconcile the two. A model in which a household's portfolio allocation reflects the preferences of both spouses, adjusted for the bargaining power of each spouse, predicts that the wealthier a household becomes, the greater the share of its wealth will be invested in risky assets.

Citation Key8922