Portfolio Choices of Parents and Their Children as Young Adults: Asset Accumulation by African-American Families

摘要: The portfolio-composition decision often is stylized as either a life-cycle choice to allocate income consumption or along risk–return locus, with the locus derived from underlying market equilibrium of asset returns and prices. Empirical work on household financial behavior has identified large differences in wealth levels portfoliocomposition choices different demographic groups, well beyond risk tolerance. By far, most striking difference this literature emerges when population subdivided by race. For example, given strong performance U.S. equity past decade, portfolio stocks have been key wealth-building, yet AfricanAmerican families less likely held mid 1980’s become shareholders over period 1989–1994 (Erik Hurst et al. 1998). This paper attempts resolve puzzle examining cross-generational influences current decisions.