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Buy, hold, and slow down too!
If you get speeding tickets, watch out: The chances are good that you will also engage in possibly dangerous investing behavior, too. That is the implication of a new study that found that individuals who receive more speeding tickets tend to churn their portfolios...They found that, other things being equal, an investor’s portfolio turnover rate rose 11 percent after each additional speeding ticket he received.
Here is the paper. Here is a longer description of the piece. The researchers do control for many variables, including age; the most likely conclusion is that there is a general propensity for thrill-seeking behind both speeding and trading behavior. Do note this is a study of the Finns.
Addendum: Via Deron Bauman, here is a good article that sadness triggers consumer spending.
Posted by Tyler Cowen on February 10, 2008 at 09:30 AM in Economics | Permalink
Comments
the most likely conclusion is that there is a general propensity for thrill-seeking behind both speeding and trading behavior.
Or impatience?
Posted by: Bernard Yomtov at Feb 10, 2008 9:38:35 AM
General propensity for selfish disregard for others on the road and in the markets.
Posted by: Meds at Feb 10, 2008 10:57:10 AM
Could it be they were just gambling to urgently raise more money to pay the tickets? Finnish speeding fines are proportional to income; president of Nokia got hit with 6 figures once (http://news.bbc.co.uk/2/hi/europe/1759791.stm)
Posted by: Yuri at Feb 10, 2008 12:03:56 PM
The correlation is weak and one should not apply the t-distribution to large samples because it artificially inflates the significance. Even if true, because of the weak correlation, it does not appear to be useful.
Posted by: Bill at Feb 10, 2008 2:04:50 PM
Meds: how is churning a selfish disregard for others in the markets?
On another note, I've acquired a decent number of Citations for Superior Motoring Performance from various state and local (and one federal!) officials. And a couple months ago I sold nearly everything in my portfolio.
Then again, I'd held those stocks since the mid-late 1990s and they had each increased 5-10 fold, and I was (still am) convinced that the previously moribund industry was peaking.
Posted by: Anon E. Mouse at Feb 10, 2008 6:44:36 PM
I have gotten more speeding tickets than anyone I know. I also still have every stock I have ever bought.
Posted by: adam at Feb 10, 2008 8:54:24 PM
Meds- Speeding does not show disregard for others on the road. That's a silly nanny-state fallacy you've bought into.
Having looked at the paper, I reject the speeding ticket dataset as not meaningful. If Finnish highways and police are anything like American (I am ignorant on this point) there are far too many variables in play for those ticket data to mean anything about sensation seeking.
CP
Posted by: carpundit at Feb 11, 2008 10:43:04 AM
Is it speeding -- or is it the fact that you got caught doing so -- that predicts dangerous investment behavior?
Posted by: Ian Maitland at Feb 11, 2008 7:25:26 PM
