The DNA of Neuroticism and Financial Decisions

Abstract

A polygenic score (PGS) capturing genetic predisposition toward neuroticism predicts heterogeneity in risk aversion, return beliefs, and stock market participation. This approach addresses key methodological and interpretive concerns associated with phenotypic measures of neuroticism. Risk aversion and return beliefs are important, but incomplete, channels linking the neuroticism PGS to stock market participation. The neuroticism PGS also predicts heterogeneity in demographic and behavioral characteristics previously shown to influence financial choices. These characteristics serve as key channels through which the genetic propensity for neuroticism shapes financial choices.