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Did You Know? Taller and Thinner People are More Likely to Buy Stocks and Take Greater Financial Risks. That’s What a New School Study Finds!

October 13, 2016
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People who are tall and normal-weight take greater financial risks and are more likely to hold stocks than shorter, overweight or obese individuals, says a new study by the School’s Department of Finance. Further, the study, to be published in Management Science, shows this effect is strongest for those who grew the fastest when they were teenagers.

Previous research has shown overweight individuals are less optimistic and confident and face higher risks of depression, which suggests they may also take less financial risks. Further, tallness is associated with positive personality factors (e.g., confidence and optimism) and positive social experiences, while obesity (as measured by body mass index or BMI) has the opposite effects. This new study considered these previous findings and how they might impact financial behavior. Key findings include:

  • An obese person is 10 percent less likely to invest in the stock market than a person of a normal weight.
  • Those in the top 20th percentile for height are 7.5 percent more likely to invest in stocks than those in the lowest 20th percentile for height.

 “While evidence exists that physical attributes influence earnings, to date, little has pointed to how easily observed physical characteristics are related to personality and how they affect investment decisions,” said George Korniotis, associate professor of finance at the School, who conducted the study along with the School’s Alok Kumar, a professor of finance, and Jawad M. Addoum of Cornell University. “We found that the environmental feedback one receives due to physical attributes shapes people and affects their portfolio decisions,” added Korniotis.

The researchers used two U.S. and two European datasets to establish the pattern between stature, obesity, and portfolio decisions. One of the U.S. datasets allowed them to observe the height and weight of people as both teenagers and later as adults. They found that people who got taller faster as teenagers were likely to participate in high school sports and activities correlated with higher teenage self-esteem, generating a long-lasting effect related to how they invest their money later in life.  

“What’s clear now is that experiences while growing up, which may seem innocuous, have a strong impact on how we handle our money later,” said Kumar.

The full study can be found at: http://pubsonline.informs.org/doi/abs/10.1287/mnsc.2016.2508 

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