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Household risky asset choice: an empirical study using BHPS

Kong, Dejing (2012)
Ph.D. thesis, University of Birmingham.

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Abstract

Using the BHPS data, we have carried out three empirical studies to investigate household risky asset choice in the UK. In the first study we follow appropriate econometric procedures to identify household specific factors that can be observed to influence a household’s asset choice through parameters of their objective function, such as risk aversion and habit. In the second and third study, we use techniques to explain the specific influence of various factors rather than finding what lies behind the interactions observed. Specifically, the second study is about examining the effect of retirement on household risky asset choice and investigating whether this effect would be different when house ownership is taken into account. In fact, we do find that retirement has a positive effect on risky asset shares for house owners while it has no effect on non-house owners. In the third study, we carry out an empirical study on the impact of taxation on household risky asset choice, and we find in the short run paying income tax has negative impact on individual’s risky asset shares and in the long run paying capital gain tax has positive effect on individual’s risky asset shares. Hence a possible policy implication is to increase the income tax allowance in order to provide incentives for people on low incomes to save, and to save in a balanced portfolio of low and high risk assets.

Type of Work:Ph.D. thesis.
Supervisor(s):Dickinson, David G. and Strobel, Frank
School/Faculty:Colleges (2008 onwards) > College of Social Sciences
Department:Department of Economics, Birmingham Business School
Subjects:HC Economic History and Conditions
HD61 Risk Management
HJ Public Finance
Institution:University of Birmingham
ID Code:3471
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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