Learning to take risks? The effect of education on risk-taking in financial markets

Sandra E. Black, Paul J. Devereux, Petter Lundborg, Kaveh Majlesi

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37 Citations (Scopus)


We investigate whether acquiring more primary education has long-term effects on risk-taking behavior in financial markets. Using exogenous variation in education from a compulsory schooling change combined with wealth data for the Swedish population, we estimate the effect of education on stock market participation and on the share of financial wealth invested in stocks, conditional on participation. For men, an extra year of education increases market participation by two percentage points and the share of financial wealth allocated to stocks by 10%. We find suggestive evidence that greater financial wealth is a potential channel through which education increases participation, consistent with the existence of fixed costs. Lower risk aversion is a potential channel through which education increases the stock share. The reform has less effect on female schooling attainment and there is no evidence that this additional education affects women's asset allocation. There is no evidence of spillovers to children.

Original languageEnglish
Pages (from-to)951-975
Number of pages25
JournalReview of Finance
Issue number3
Publication statusPublished - May 2018


  • Asset allocation
  • Portfolio choice
  • Returns to education
  • Risky share

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