Genes and investing

基因与投资

Natural stock selection

自然选择股票

A new excuse for lousy investors

差劲的投资者有了新借口

Mar 10th 2012 | from the print edition

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ECONOMISTS work on the assumption that people act rationally. If only life were that simple. Investors certainly don’t always act as they should. Among other follies, they trade too much, do not diversify their portfolios enough and are loth to discard underperforming stocks. They may have been born to behave that way. A recent study* into investment behaviour by Stephan Siegel of Arizona State University’s WP Carey School of Business, and Henrik Cronqvist of Claremont McKenna College, illuminates the role that genes play in determining investment decisions.


The authors examine the investment behaviour of 15,208 pairs of Swedish twins, using data from the country’s twin registry and its tax authority, which until 2007 kept comprehensive records on every financial transaction. Controlling for various factors, they find that identical twins, who share all their genes, were more similar in their investing behaviour than fraternal twins, who share about half their genes.


The authors calculate that genetic factors account for between a quarter and half of the variations in irrational investment behaviour between individuals. These factors are at work across more dimensions than just investing. Twins who showed a bias towards buying familiar shares rather than taking a punt on unknown ones, for example, also showed a preference for living closer to their place of birth and for marrying a spouse from the same region. Investors with large portfolios were particularly susceptible to genetic influences.

If genes explain up to a half of the variations in investment behaviour, what governs the rest? The authors also calculated the impact of shared environmental influences on the twins as well as the effect of experiences unique to one half of a twin pair. Common childhood experiences like schooling were found to have almost no influence on investment behaviour. But individual experiences explain half of the variations between twin pairs—as much as, and often more than, genes.

The study has its limitations. It looks at data from only one country during a limited period of time, for example. But it suggests that attempts to nudge people to invest more rationally have some big inbuilt biases to overcome.