Abstract:
A number of recent papers have examined the environmental and genetic
sources of individual differences in economic and financial
decision-making. Here we contribute to this burgeoning literature by
extending it to a number of key behavioral anomalies that are thought to
be of importance for consumption, savings and portfolio selection
decisions. Using survey-based evidence from more than 11,000 Swedish
twins we demonstrate that a number of anomalies such as for instance the
conjunction fallacy, default bias and loss aversion are moderately
heritable. In contrast, our estimates imply that variation in common
environment explains only a small share of individual differences. We
also report suggestive evidence in favor of a shared genetic
architecture between cognitive reflection and a subset of the studied
anomalies. These results offer some support for the proposition that the
heritable variation in the behavioral anomalies is partly mediated by
genetic variance in cognitive ability. Taken together with previous findings our results underline the importance of genetic differences as
a source of heterogeneity in economic and financial decision-making. |