Who gambles in the stock market?

Research output: Contribution to journalArticle

335 Citations (Scopus)

Abstract

This study shows that the propensity to gamble and investment decisions are correlated. At the aggregate level, individual investors prefer stocks with lottery features, and like lottery demand, the demand for lottery-type stocks increases during economic downturns. In the cross-section, socioeconomic factors that induce greater expenditure in lotteries are associated with greater investment in lottery-type stocks. Further, lottery investment levels are higher in regions with favorable lottery environments. Because lottery-type stocks underperform, gambling-related underperformance is greater among low-income investors who excessively overweight lottery-type stocks. These results indicate that state lotteries and lottery-type stocks attract very similar socioeconomic clienteles.

Original languageEnglish (US)
Pages (from-to)1889-1933
Number of pages45
JournalJournal of Finance
Volume64
Issue number4
DOIs
StatePublished - Aug 2009
Externally publishedYes

Fingerprint

Stock market
Lottery
Gambles
Socio-economics
Propensity
State lotteries
Individual investors
Underperformance
Investors
Expenditure
Gambling
Low income
Investment decision
Cross section
Socioeconomic factors
Economic downturn
Clientele

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Who gambles in the stock market? / Kumar, Alok.

In: Journal of Finance, Vol. 64, No. 4, 08.2009, p. 1889-1933.

Research output: Contribution to journalArticle

Kumar, Alok. / Who gambles in the stock market?. In: Journal of Finance. 2009 ; Vol. 64, No. 4. pp. 1889-1933.
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