Ziwei ZHAO
Investing Like My Parents: Do Parents Affect Children's Risk Taking Behavior?
We study whether learning from parents has a long-lasting effect on children's risk-taking
in the stock market, which provides a channel leading to wealth inequality. Using parents'
stock market experiences before parenthood as IVs for parents' risk-taking, we find that
parents' risk-taking positively aspects children's risk-taking. More importantly, exploiting a
finding that parents spend more quality time with their first child, we find that this parental
effect we identified is mainly driven by learning from parents through one's childhood inter-
actions with their parents. As risk-taking traits are passed down from parents to children
over generations, differences in stock market participation across families could lead to severe wealth inequality.