Ulrike Malmendier on who avoids investing | New Statesman America

“One thing that attracts people to Boris Johnson is his cheerfulness about Britain’s prospects. Telegraph columnist Liam Halligan and Conservative MP Owen Paterson both praise his “sunny optimism”, while Johnson’s former flatmate Matthew Leeming writes — I kid ye not — that “we need a cheerleader to remind us we are an erect and manly people.” But I wonder: is there a class aspect here?

I ask because of a recent paper by Erin McGuire of the National Bureau of Economic Research. She shows that: “Individuals who begin their lives by observing an economic downturn remain pessimistic and risk averse with respect to investments over the course of their lifetimes.”

This corroborates work by Ulrike Malmendier and Stefan Nagel and by Miguel Ampudia and Michael Ehrmann. And it’s consistent with research by Henrik Cronqvist, of the University of Miami, and colleagues. They show that people who grew up in poorer homes, or who entered the labour market during a recession, tend to avoid growth stocks even years later.”

Read more: Why optimism is a class issue