DP7162 Marriage and Other Risky Assets: A Portfolio Approach

Author(s): Graziella Bertocchi , Marianna Brunetti , Costanza Torricelli

Publication Date: February 2009

Keyword(s): divorce , labor force participation , marriage , Portfolio choice

JEL(s): E21 , G11 , J12 , J21

Programme Areas: Financial Economics , International Macroeconomics , Public Policy

Link to this Page: www.cepr.org/pubs/dps/DP7162.asp.asp

We study the joint impact of gender and marital status on financial decisions. First, we test the hypothesis that marriage represents - in a portfolio framework - a sort of safe asset, and that this effect is stronger for women. Controlling for a number of observable characteristics, we show that single women have a lower propensity to invest in risky assets than married females and males. Second, we show that the differential behavior of single women evolves over time, reflecting the increasing incidence of divorce and the expansion of female labor market participation. In particular, towards the end of our sample period, we observe a reduction in the gap between women with different family status, which can be attributed to the gradual erosion of the perception of marriage as a sort of safe asset. Our results therefore suggest that the differential behavior of single vs. married women can be explained by the evolution of gender roles in society, even after controlling for differential risk attitudes. Our empirical investigation is based on a dataset drawn from the 1989-2006 Bank of Italy Survey of Household Income and Wealth.