How does stock market fluctuations affect senior citizens' portfolio choices?

Objectives: exploring the causal effect of stock market fluctuations on senior citizen's portfolio choices using the Health and Retirement Survey (HRS)

Study design: We investigate how does stock market ups and downs affect people's investment decisions. Then, we examine how the relationship between individual portfolio choices and stock market returns is affected by social economic determinants and genetic markers associated with risk-taking behavior. Our goal is to analyze genetic information, stock market fluctuations, and portfolio choices and determine how genetic markers impact seniors' financial decision-making under different market conditions.

Analysis plan: We use HRS to construct variables that reflect individual's financial assets, including stocks, bonds, and other investment. We collect data on stock market returns from CRSP and COMPUSTAT, and create national-level and state-level market returns. By comparing individual's portfolio choices at different year (corresponding to different market returns) or comparing people's portfolio choices across states (corresponding to different state-level returns), we examine how each individual's portfolio choices change as the stock market fluctuates. we then examine how education or cognition (represented by education- and cognition-related genetic variants) and risk preferences (risky behavior-related genetic variants) affect impact seniors' financial decision-making under different market conditions. For example, we use an instrument variable (IV) approach to isolate random variation in financial literacy and education and estimate causal effects of education on portfolio choices among older adults. The IVs are constructed from individual’s genetic variants, either key single nucleotide polymorphisms (SNPs) or the polygenic score (PGS).

The objective of this study is to link genetic information, stock market shifts, and portfolio choices to understand how genetic markers affect senior citizens' financial decisions under varying market circumstances using the Health and Retirement Surveys (HRS). The study is designed to scrutinize the effect of market volatility on investment choices, and how this connection is further impacted by socioeconomic factors and genetic markers linked to financial literacy and risk-taking behavior. The findings can be used to inform policy and financial education initiatives that target senior citizens and promote healthy financial decision-making. Additionally, the study can highlight the importance of considering genetics in financial decision-making and its potential implications for financial advisors and investment managers. Additionally, the study can highlight the importance of considering genetics in financial decision-making and its potential implications for financial advisors and investment managers.